'SYNOPSIS 


OF  THE 


THAYER 


\  3352s 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


A    SYNOPSIS 


OF     THE 


LAW    OF    CONTRACT 

ORIGINALLY      PREPARED      BY     THE      LATE 

AMOS    M,    THAYER 

UNITED    STATES    CIRCUIT   JUDGE. 
EIGHTH    JUDICIAL    CIRCUIT 

FOR     THE     USE     OF 


THE    ST.    LOUIS     LAW    SCHOOL 
WASHINGTON     UNIVERSITY 


REVISED     BY 


BYRON    F.    BABBITT. 

OF     THE      ST.     LOUIS      BAR 

UNITED     STATES     COMMISSIONER,     EASTERN 
DISTRICT     OF     MISSOURI 


THOMAS     LAW     BOOK    COMPANY 

ST.     LOUIS 

1922 


Copyright  1922 
By  Thomas  Law  Book  Company 


Mound  City  Press,  Inc. 
St.  Louis,  Mo. 


NOTE. 

For  many  years  prior  to  his  decease,  Judge  Thayer  occupied  the 
chair  of  Contracts  in  the  Washington  University  School  of  Law, 
formerly, known  as  the  St.  Louis  Law  School,  and  while  so  engaged 
he  prepared  this  ''Synopsis  of  the  Law  of  Contract"  for  the  special 
use  of  his  classes  in  that  subject.  Since  Judge  Thayer's  decease 
on  April  24,  1905,  it  has  been  deemed  advisable  to  publish  a  second 
edition,  modifying  the  former  text  in  the  light  of  certain  statutory 
enactments  and  revisions  which  have  since  been  made.  The 
arrangement  of  the  original  text  has  been  preserved,  and  Judge 
Thayer's  exact  language,  as  far  as  possible  retained.  His  prior 
statutory  references  have  been  brought  down  to  date,  and  where- 
ever  the  text  book  "Lawson  on  Contracts"  is  herein  referred  to, 
additional  and  similar  references  to  "Williston  on  Contracts"  have 
been  made. 

It  is  hoped  that  to  many  of  Judge  Thayer's  old  friends  and 
former  associates  of  the  Bench  and  Bar,  and  especially  to  the 
present  law  students,  this  "Synopsis  of  the  Law  of  Contract"  will 
be  found  a  handy  book  of  reference  and  information  upon  this 
most  important  legal  subject. 

BYRON  F.  BABBITT. 


/'       I 


SYNOPSIS 


OF    THE 


LAW  OF  CONTRACT 


1.  A  contract  is  an  agreement,  either  express  or  implied,  to 
do  or  refrain  from  doing  some  act,  which  the  law  will  enforce. 
Sturges  V.  Crowninshield,  4  Wheat.  197. 

2.  When  the  contract  is  expressed  in  words,  either  oral  or 
written,  it  is  termed  an  express  contract.  When  the  promise  is 
not  so  expressed,  but  is  left  to  be  inferred  from  acts,  circumstances, 
or  transactions,  it  is  termed  an  implied  contract. 

3.  Implied  contracts  are  subdivided  into  two  classes,  to  wit: 
"Contracts  Implied  as  a  Fact,"  and  "Contracts  Created  by  Law." 

4.  Contracts  implied  as  of  fact  are  those  in  which  an  inference 
arises  from  circumstances  that  a  party  intended  to  become  bound, 
as  where  a  person  goes  into  a  store,  examines  an  article  and  orders 
it  to  be  sent  to  his  house,  which  is  done,  and  the  article  is  accepted. 
In  this  instance  a  court  or  jury  would  be  authorized  to  infer  that 
the  person  ordering  the  article  intended  to  pay  its  reasonable 
value,  and  he  would  be  held  bound  as  upon  an  express  promise  to 
that  effect. 

5  A  contract  created  by  law  is  one  in  which  a  person  is  con- 
clusively presumed  to  have  made  a  promise,  although  he  did  not 
in  fact  do  so,  or  so  intend.  For  example,  a  person  takes  possession 
of  my  property,  claiming  it  as  his  own  and  not  intending  to  pay 
for  it.  In  such  a  case  I  may  sue  the  wrong-doer  as  upon  a  promise, 
which  the  law  creates,  to  pay  its  reasonable  value.    Post,  57. 


6.  CONTRACT  IMPLIED  FROM  AN  EXPRESS  CON- 
TRACT.— Under  some  circumstances  a  contract  is  implied  from 
an  express  contract.  For  example,  when  a  person  sells  personal 
property  in  his  possession  at  an  agreed  price,  or  for  its  reasonable 
market  value,  the  law  usually  implies  a  promise  on  his  part  to 
warrant  the  title,  although  nothing  is  said  on  that  subject  in  the 
contract  of  sale. 

7.  Contracts  are  also  classified  as  follows:  Contracts  under 
seal,  simple  contracts,  and  contracts  of  record. 

Contracts  under  seal  are  those  which  have  a  seal  or  scrawl 
attached  to  the  promisor's  name,  such  as  deeds,  bonds,  or  other 
instruments. 

Contracts  of  record  are  those  which  are  evidenced  by  the  record 
of  some  court,  such  as  judgments  and  recognizances. 

All  other  contracts,  whether  express  or  implied,  are  termed 
simple  contracts. 

8.  When  a  contract  has  been  fully  performed  by  both  parties, 
it  is  termed  an  executed  contract.  When  it  has  not  been  fully  per- 
formed, it  is  termed  an  executory  contract. 

9.  ESSENTIALS  OF  A  CONTRACT.— It  is  usually  said  that 
four  things  are  essential,  as  long  as  a  contract  remains  executory, 
to  render  it  obligatory  and  enforceable: 

First.  There  must  be  parties  on  each  side  who  are  competent 
to  make  an  agreement. 

Second.     There  must  be  a  lawful  subject-matter. 

Third.  The  parties  to  the  contract  must  have  mutually  assented 
or  agreed  to  the  terms  thereof;  and 

Fourth.  The  promises  made  must  be  supported  by  a  valuable 
consideration. 

10.  But  a  promise,  to  become  binding  upon  the  party  making 
it,  must  possess  several  other  requisites: 

In  the  first  place,  it  must  be  made  under  circumstances  which 
indicate  an  intention  to  become  bound.  Thus,  where  a  person 
laboring  under  great  pains  from  wounds  that  had  been  inflicted, 
exclaimed  that  he  would  give  $200  to  have  the  party  who  had 
inflicted  them  arrested— it  was  held  that  he  was  not  liable  to  one 
who  had  acted  on  the  promise,  because  it  was  manifest  that  the 


promisor  had  no  intention  of  entering  into  a  contract  for  the  arrest 
of  his  assailant.     Stamper  v.  Temple,  6  Humph.  113. 

Secondly.  A  promise  must  have  reference  to  a  legal,  as  dis- 
tinguished from  a  mere  social  engagement,  and  must  not  have  been 
made  as  a  mere  joke  or  piece  of  fun.  Thus,  if  two  persons  agree 
to  meet  at  a  certain  time  and  place,  and  go  thence  to  a  base-ball 
game,  no  action  lies,  though  one  breaks  his  engagement. 

Thirdly.  The  promise  must  not  be  so  vague  or  indefinite  as  to 
make  it  impossible  to  say  what  was  undertaken.  Thus,  where  A 
promised  B  that  if  she  would  live  with  him  until  her  marriage,  he 
would  give  her  100  acres  of  land,  without  specifjing  the  value  or 
location  of  the  land,  it  was  held  that  the  promise  was  too  vague 
to  be  enforceable.     Sherman  v.  Kitsmiller,  17  S.  &  R.  45. 

11.  PERSONS  COMPETENT  TO  PROMISE.— Persons  com- 
petent to  contract  are  those  who  have  attained  their  majority, 
who  are  of  sound  mind,  and  who  are  not  subject  to  any  legal 
disability,  such  as  the  disability  of  coverture  in  the  case  of  married 
women. 

12.  SUBJECT-MATTER,  WHEN  LAWFUL.— The  subjec^ 
matter  of  a  contract  is  lawful  when  the  contract  does  not  require 
the  doing  of  any  act  that  is  either  forbidden  by  law,  or  that  is 
immoral,  or  is  opposed  to  public  policy. 

13.  WHEN  UNLAWFUL.— A  contract  by  which  either  party 
thereto  agrees  to  do  an  unlawful  act — for  example,  to  commit  an 
assault  upon  another,  or  to  injure  or  destroy  another's  property — 
is  not  enforceable  for  the  reason  that  the  subject-matter  of  the 
contract  is  unlawful.  The  subject-matter  of  a  contract  is  also  un- 
lawful if  the  act  agreed  to  be  done  is  prohibited  by  law  although 
it  is  not  declared  to  be  a  crime. 

14.  OPPOSED  TO  PUBLIC  POLICY.— The  subject-matter  of 
a  contract  is  unlawful  if  the  act  or  acts  stipulated  to  be  done  have 
a  tendency  to  injuriously  affect  the  public  welfare.  Contracts 
in  total  restraint  of  trade,  wagering  contracts  of  all  descriptions, 
and  contracts  which  have  a  tendency  to  induce  men  to  violate 
public  or  private  trusts — are  contracts  of  this  description.  Post, 
See.  98. 

15.  MUTUAL   ASSENT.— To  render  a  contract  binding  the 


proposition  made  by  one  party  must  be  understood  by  and  assented 
to  by  the  other,  in  the  very  sense  in  which  the  proposition  is  made. 
Thus,  if  A  says  to  B,  pointing  to  a  field  in  which  there  is  a  horse 
and  a  mule,  "you  may  have  that  animal  for  seventy-five  dollars," 
and  B  says,  * '  I  will  take  it, ' '  supposing  that  the  horse  was  referred 
to,  whereas  A  referred  to  the  mule — no  contract  is  made,  because 
there  is  a  want  of  mutual  assent ;  the  minds  of  the  parties  have 
not  met.  (  ^ 

CONSIDERATION. 

16.  It  is  customary  to  speak  of  the  consideration  of  a  contract 
as  being  either  "good"  or  "valuable."  A  good  consideration  is 
love  and  affection,  such  as  a  father  entertains  for  his  wife,  child,  or 
kinsman.  A  valuable  consideration,  on  the  other  hand,  is  anything 
the  value  of  which  is  capable  of  estimation  in  money. 

17.  A  merely  "good  consideration"  for  an  executory  promise 
is  not  sufficient,  in  law,  to  render  it  enforceable.  For  example,  if 
a  father  promises  to  give  his  son  a  horse  or  a  farm,  merely  in 
consideration  of  love  and  affection,  the  promise  cannot  be  enforced ; 
but  if  such  promise  is  based  upon  a  payment  of  money  made  by  the 
son,  or  upon  the  doing  of  any  act  by  the  son  which  is  beneficial  to 
the  father  or  detrimental  to  the  son,  it  is  enforceable. 

18.  Promises  are  not  enforceable  unless  they  are  founded  upon 
what  the  law  deems  a  valuable  consideration ;  but  the  doing  of  any 
lawful  act,  or  the  promise  to  do  any  lawful  act,  which  may  be  to 
the  disadvantage  of  one  party  to  a  contract,  or  beneficial  to  the 
other,  is  deemed  a  valuable  consideration.  Thus,  the  rendition  of 
services  of  any  kind  by  one  person  for  another,  is  deemed  a  valu- 
able consideration  which  will  support  a  promise  to  pay  for  the 
same.  Or  if  A  refrains  from  doing  a  certain  act  which  he  may 
lawfully  leave  undone,  in  consequence  of  a  promise  by  B  to  pay  him 
a  certain  sum  of  money  for  so  doing,  in  such  a  case,  the  loss  or  dis- 
advantage that  A  may  sustain,  or  the  benefit  that  may  accrue  to  B, 
is  deemed  a  valuable  consideration  which  will  support  B's  promise. 
Advice  given  by  a  lawyer  to  his  client,  or  by  a  physician  to  his 
patient,  is  deemed  a  valuable  consideration  to  support  a  promise 
to  pay  for  such  advice. 

19.  MUTUAL  PROMISES  A  CONSIDERATION.— When  a 
contract  is  wholly  executory  (nothing  thereunder  having  been  done 


by  either  party),  the  consideration  which  necessarily  supports  such 
contract  is  mutual  promises.  It  follows  that  a  promise  made  by  one 
person  is  frequently  a  valuable  consideration  for  a  promise  made  by 
another  person. 

20.  PROMISE  TO  DISCHARGE  A  LEGAL  OBLIGATION. 
—But  when  one  party  to  an  agreement  promises  to  do  no  more 
than  it  was  his  legal  duty  to  do  before  the  promise  was  made,  such 
promise  will  not  support  a  promise  made  by  the  opposite  party  to 
do  something  in  return. 

For  example,  if  A  owes  B  a  sum  of  money  and  interest  thereon, 
which  is  due,  and  A  promises  to  pay  the  interest  if  B  will  extend 
the  loan,  which  B  promises  to  do,  here  B's  promise  to  extend  the 
loan  is  not  supported  by  a  valuable  consideration  and  cannot  be 
enforced. 

21.  VALUE  OF  SERVICES  FIXED  BY  LAW.— Ordinarily 
the  law  permits  persons  to  agree  as  to  the  value  of  property  or 
services  which  form  the  subject-matter  of  a  contract,  but  when  the 
law  has  fixed  the  value  of  a  particular  service,  as  by  prescribing 
the  fees  to  be  charged  by  an  officer  for  official  services,  a  promise 
made  by  an  individual  to  pay  more  than  the  established  value  of 
the  service  is  not  enforceable.     Burk  v.  Webb,  32  Mich.  173. 

22.  ONE  SUM  OF  MONEY  NOT  THE  LEGAL  EQUIV- 
ALENT OF  A  GREATER  SUM.— When  a  person  owes  a  certain 
sum  of  money,  say  one  thousand  dollars,  a  promise  by  the  creditor 
to  take  a  less  sum  in  money  (say  seven  hundred  and  fifty  dollars) 
and  to  discharge  the  debt,  is  not  enforceable  for  want  of  consider- 
ation. As  the  law  measures  all  values  in  money,  seven  hundred  and 
fifty  dollars  is  not  regarded  as  the  equivalent  of  one  thousand 
dollars ;  therefore  a  promise  to  pay  the  smaller  sum  is  not  a  valid 
consideration  for  a  promise  to  discharge  a  debt  for  the  larger 
amount  which  is  at  the  time  due.  Nevertheless,  a  promise  to  accept 
something  besides  money  which  the  debtor  is  not  bound  to  deliver, 
in  discharge  of  a  debt  of  one  thousand  dollars,  would  be  valid, 
although  the  creditor  received  much  less  in  value  than  one  thousand 
dollars.  So  a  promise  to  take  less  than  one  thousand  dollars  in  dis- 
charge of  the  debt  would  be  enforceable,  if  the  money  was  paid  in 
advance  of  maturity,  or  at  a  place  different  from  that  specified  in 
the  contract. 


10 

23.  Agreements,  such  as  are  referred  to  in  the  last  section,  to 
take  a  less  sum  than  is  due  in  discharge  of  a  debt,  are  usually  con- 
summated and  rendered  effectual,  by  paying  the  smaller  sum  and 
taking  from  the  creditor  a  release  under  seal.  The  seal  imports  a 
consideration,  as  will  appear  hereafter. 

24.  COMPOSITION  AGREEMENTS.— Where  several  cred- 
itors enter  into  a  mutual  agreement  among  themselves  and  with  the 
debtor  to  take  less  than  is  due  and  to  discharge  their  several  debts — 
such  an  agreement  is  held  to  rest  on  a  sufficient  consideration. 

25.  AVOIDANCE  OF  LITIGATION  A  CONSIDERATION.— 

Although  a  promise  to  take  a  less  sum  of  money  than  is  due  from 
a  debtor  and  to  discharge  the  debt,  is  not  an  enforceable  prom.ise, 
yet  where  the  amount  actually  due  is  in  dispute  between  the  debtor 
and  creditor,  an  agreement  to  take  less  than  is  claimed,  and  less 
than  is  actually  due,  by  way  of  compromise,  is  binding.  In  this 
instance  the  law  regards  the  avoidance  of  litigation  as  a  valuable 
consideration. 

26.  Also  where  one  person  brings  a  suit  against  another,  or 
threatens  to  do  so,  for  a  sum  of  money  in  good  faith  claimed  to  be 
due,  the  dismissal  of  such  suit,  or  a  promise  not  to  bring  it,  is  a  suf- 
ficient consideration  for  a  promise  by  the  party  sued  or  threatened 
to  be  sued,  to  pay  to  the  claimant  a  sum  of  money,  or  to  do  any 
other  lawful  act.  But  if  the  claim  preferred  is  utterly  groundless, 
and  the  promise  to  pay  it  is  made  without  knowledge  that  it  is 
groundless,  and  in  ignorance  of  material  facts  or  circumstances 
which  have  a  bearing  upon  the  validity  of  the  claim,  it  is  most 
probable  that  the  promise  would  not  be  enforced. 

27.  RELEASE  FROM  OBLIGATION.— If  A  is  under  a  con- 
tract obligation  to  B  to  do  a  given  act,  and  B  releases  A  from  the 
obligation,  such  release  is  a  sufficient  consideration  for  a  promise 
on  the  part  of  A  to  do  something  else. 

28.  PROMISE  TO  DISCHARGE  A  LEGAL  OBLIGATION 
ENFORCEABLE. — If  a  person  is  under  a  legal  obligation  to  an- 
other to  do  a  given  act,  his  express  promise  to  do  that  act  is  enforce- 
able. A  legal  obligation  to  do  a  thing  is  a  sufficient  consideration 
for  a  promise  to  do  it.  But  a  merely  moral  obligation  to  do  a  given 
act  is  not  a  sufficient  consideration  for  a  promise  to  do  it.    For  ex- 


11 

ample,  a  son  is  under  a  moral  obligation  to  support  his  parents  in 
their  old  age,  if  he  is  able  and  they  are  needy,  but  a  promise  by 
the  son  to  so  support  them,  based  on  such  moral  obligation,  would 
not  be  enforceable,  for  want  of  consideration. 

29.  INADEQUATE  CONSIDERATION.— When  a  promise  is 
founded  upon  a  consideration  which  the  law  deems  valuable,  it 
will  be  enforced  although  the  consideration  may  be  inadequate.  A 
promise  on  the  part  of  a  person  to  sell  a  farm  for  one-quarter  of 
what  it  is  worth,  will  be  enforced  at  law,  as  well  as  a  promise  to 
sell  it  for  its  full  value.  Courts  pay  no  attention  to  the  fact  that 
the  consideration  for  a  promise  is  inadequate,  except  in  those 
cases  where  the  validity  of  a  contract  is  assailed  on  the  ground  of 
fraud.  In  such  cases  inadequacy  of  consideration  may  be  strong 
evidence  of  fraud.  A  promise  to  sell  land  will  not  be  specifically 
enforced  in  equity,  if  the  consideration  is  grossly  inadequate.  In 
such  cases  a  party  must  sue  at  law  for  the  damages  sustained. 

30.  FAILURE  OF  CONSIDERATION.— It  sometimes  happens 
that  an  article  or  thing  bargained  for,  contrary  to  the  expectation 
of  the  parties,  has  no  existence,  or  the  title  thereto  fails,  or  the 
article  is  different  in  kind  or  quality  from  what  it  was  supposed 
to  be.  In  all  of  these  cases  the  consideration  supporting  the  buyer 's 
promise  to  pay  for  the  article  or  thing  bought,  is  said  to  have  failed. 

31.  FAILURE  OF  CONSIDERATION  TOTAL  AND  PAR- 
TIAL. — Sometimes  the  consideration  fails  in  toto,  in  which  event 
the  buyer 's  promise  cannot  be  enforced ;  or  if  he  has  paid  for  the 
article,  the  sum  paid  may  be  recovered.  In  other  instances  there 
may  be  a  partial  failmre  of  consideration,  in  which  event  the  seller 
can  only  recover  a  portion  of  the  contract  price;  in  some  cases 
(depending  on  circumstances  to  be  hereafter  explained)  the  buyer 
may  altogether  rescind  a  contract  for  even  a  partial  failure  of  con- 
sideration. 

32.  SALES  WITHOUT  WARRANTY  OF  TITLE  OR  QUAL- 
ITY. — It  may  happen  that  a  person  buys  property  under  such  cir- 
cumstances that  there  is  no  warranty  by  the  seller  either  of  title 
or  quality.  A  common  instance  of  a  sale  of  this  kind  is  one  made 
by  a  sheriff  or  marshal  under  execution,  in  which  case  there  is 
ordinarily  no  warranty  of  title  or  quality.  In  the  case  of  a  sale 
thus  made  without  warranty,  there  is  no  such  failure  of  consider- 


12 

ation  as  will  avail  the  buyer  as  a  defence  to  his  promise  to  pay, 
although  the  title  fails,  or  the  article  proves  to  be  defective  and 
valueless. 

33.  ARTICLE  SOLD  BECOMES  VALUELESS  AFTER 
SALE.— When  an  article  sold  is  what  it  was  supposed  to  be,  or 
was  warranted  to  be  at  the  time  of  the  sale,  but  it  subsequently  be- 
comes valueless,  the  loss  falls  upon  the  buyer.  In  such  cases 
failure  of  consideration  cannot  be  successfully  pleaded  by  the  buyer 
as  a  defence  to  his  promise  to  pay  for  the  thing  bought. 

34.  CONSIDERATION  IN  PART  UNLAWFUL.— It  some- 
times happens  that  a  part  of  the  consideration  for  a  single  promise 
is  lawful,  and  a  part  unlawful.  In  such  cases  no  recovery  can  be 
had  on  the  contract.  For  example,  if  the  consideration  of  a  note 
consists  in  part  of  merchandise  sold  and  in  part  of  liquor  sold  in 
violation  of  law,  no  recovery  can  be  had  on  the  note.  But  if 
a  suit  is  brought  upon  an  open  account  consisting  of  separate 
items,  a  part  of  which  are  lawful  and  a  part  unlawful,  a  recovery- 
may  be  had  for  such  items  of  the  account  as  are  lawful. 

35.  ACTUAL  CONSIDERATION  MAY  BE  SHOWN.— In  an 

action  brought  upon  a  written  contract  the  real  consideration  may 
be  shown,  although  it  differs  from  the  consideration  expressed  in 
the  contract.  Such  proof  is  permitted  because  the  consideration 
upon  which  a  contract  rests  is  not  always  fully  described.  Besides, 
the  admission  of  such  evidence  prevents  the  enforcement  of  con- 
tracts that  are  founded  upon  an  unlawful  or  immoral  consider- 
ation. 

36.  EXECUTED  CONTRACTS.— When  a  promise  has  been 
fully  executed,  it  usually  matters  not  whether  it  was  supported  by 
a  consideration.  The  law  will  not  afford  relief  for  what  has  been 
done  in  accordance  with  a  promise,  although  the  promise  was  with- 
out consideration  and  therefore  not  enforceable.  Thus,  if  a  person 
without  consideration  promises  to  pay  another  a  sum  of  money, 
and  makes  such  payment,  the  money  cannot  be  recovered  from  the 
payee. 

37.  GIFTS  EXECUTED.— When  a  gift  of  money  or  property 
is  made  and  the  article  or  thing  given  is  delivered  to  the  donee,  it 
cannot  be  recovered.  But  an  exception  to  this  rule  is  allowed  in 
favor  of  creditors  of  the  donor;  if  the  gift  operates  to  prevent 


a 


13 

u  creditor  of  the  donor  from  collecting  his  debt,  the  donee  may  be 
compelled  to  restore  to  the  creditor  what  he  has  received,  or  so 
much  thereof  as  wiU  discharge  the  creditor's  claim  against  the 
donor. 

38.  EXECUTORY  CONTRACTS  MUST  BE  MUTUALLY 
BINDING.— If  one  party  to  an  executory  agreement  promises  to  do 
a  given  act  and  the  opposite  party  does  not  promise  to  do  anything 
in  return,  the  contract  is  said  to  lack  mutuality  and  is  not  enforce- 
able. For  example,  where  C  agreed  to  furnish  coal  to  the  amount 
of  60,000  bushels  and  in  such  quantities  as  M  might  designate,  but 
M  did  not  agree  to  take  any  given  quantity  of  coal,  the  contract 
was  held  to  be  void  for  want  of  mutuality.  Campbell  v.  Lambert, 
36  La.  Ann.  35 ;  see  also  Townsend  v.  Horning,  23  Wend.  435,  and 
Dodge  V.  Hopkins,  14  Wis.  630.  But  it  sometimes  happens  that  a 
promise  which  was  not  binding  when  made  becomes  binding  by 
some  act  subsequently  done  by  the  promisee.  For  example,  if  A 
promises  to  pay  B  a  sum  of  money  when  B  shall  have  done  a 
given  act,  here  A  becomes  bound  if  B,  within  a  reasonable  time, 
does  the  act,  although  B  did  not  promise  to  do  what  A  requested  at 
the  time  A's  promise  was  made. 

And  where  A  promised  to  furnish  B  with  such  goods  of  a  certain 
kind  as  the  latter  might  order  within  a  certain  period,  and  B  gave 
one  order  which  was  filled,  and  subsequently  gave  a  second  order 
which  A  declined  to  fill,  it  was  held  that  A  was  bound  to  fill  the 
second  order.  Railway  Company  v.  Whitham,  Law  Reports,  9 
C.  P.,  16,  20.  In  the  last  example  given  the  promise  made  by  A 
was  a  continuing  promise  or  offer,  which  became  binding  whenever 
B  accepted  it  by  giving  an  order,  providing  the  offer,  in  the  mean- 
time, had  not  been  withdrawn. 

39.  CONSIDERATION  EXECUTED.— If  that  which  forms 
the  consideration  for  a  promise  has  been  wholly  done  or  performed 
before  any  promise  is  made,  the  promise  is  without  consideration 
and  is  not  enforceable.  For  example,  if  A,  without  being  requested 
so  to  do,  and  as  a  mere  favor,  renders  B  a  valuable  service,  a  prom- 
ise made  by  B,  after  the  service  is  fully  rendered,  to  pay  for  the 
same,  is  not  enforceable.  So,  if  a  creditor  voluntarily  forbears  to 
collect  a  debt  for  a  year  after  it  is  due,  a  promise  made  by  the 
debtor  after  the  expiration  of  the  year  to  pay  for  the  forebearance, 
is  not  enforceable. 


14 

40.  CONSIDERATION  IN  PART  EXECUTED.— But  where 
the  consideration  has  been  in  part  but  not  wholly  rendered  when 
the  promise  is  made,  the  promise  may  be  enforced.  For  example, 
if  A  makes  B  a  present  of  a  horse  and  A  subsequently  agrees  to 
sell  and  deliver  to  B  another  horse  on  condition  that  B  will  there- 
upon pay  the  reasonable  value  of  both  horses,  this  latter  promise 
by  B,  although  it  rests  upon  a  consideration  that  is  executed  in 
part,  may  be  enforced. 

41.  ACT  DONE  BY  REQUEST.— Whenever  a  lawful  act  is 
done  or  a  service  is  rendered  at  another 's  request,  the  doing  of  the 
thing  requested  will  support  a  promise  to  pay  for  it,  if  made  by 
the  person  at  whose  instance  the  act  was  done,  although  the  prom- 
ise is  not  made  until  after  the  service  is  fully  rendered.  The  law 
regards  the  promise  and  request  as  made  at  the  same  time. 

42.  EXPRESS  PROMISE— WHEN  IT  WOULD  BE  IM- 
PLIED.— So,  if  an  act  is  done  under  such  circumstances  that  the 
law  would  imply  a  promise  to  pay  for  it,  an  express  promise  to 
pay,  made  after  the  act  is  done,  will  be  enforced. 

43.  WAIVER  OF  LEGAL  RIGHTS. — In  some  cases,  it  seems 
that  a  promise  to  pay  a  debt  or  demand,  notwithstanding  the  ex- 
istence of  a  legal  defence  thereto,  does  not  require  a  consideration 
to  render  the  same  obligatory  upon  the  party  making  it.  For  ex- 
ample: A  promise  made  by  a  debtor  to  pay  a  debt  that  is  barred 
by  the  Statute  of  Limitations,  or  by  a  discharge  in  bankruptcy, 
although  made  without  a  new  consideration,  will  have  the  effect  of 
avoiding  a  plea  of  the  statute  or  the  discharge,  and  will  render  the 
debt  or  demand  collectible.  In  like  manner,  a  promise  made  by 
the  indorser  of  a  bill  or  note  to  pay  it,  after  he  has  been  released 
from  all  liability  on  his  contract  of  indorsement  by  a  failure  of 
the  holder  of  the  note  or  bill  to  present  it  for  payment  at  maturity, 
or  to  give  notice  of  its  non-payment,  is  binding  upon  the  promisor, 
if  the  promise  in  question  was  made  with  full  knowledge  that  he 
had  been  released  from  liability. 

44.  But  a  rule  different  from  that  last  stated  seems  to  prevail 
where  a  debt  or  liability  has  been  cancelled  by  the  act  of  the 
parties.  Thus,  where  a  debt  has  been  released  by  the  creditor  by 
a  release  executed  under  seal,  a  subsequent  promise  to  pay  the  debt, 


15 

notwithstanding  the  release,  is  not  enforceable,  unless  the  same  was 
founded  on  a  new  consideration, , 

s) 

CONTRACTS  UNDER  SEAL. 

45.  A  seal  is  something  affixed  to  the  paper  on  which  a  contract 
is  written,  opposite  to  the  party's  signature,  like  a  wafer,  or  it 
may  be  an  impression  of  some  device  made  or  embossed  on  the 
paper.  By  statute  in  some  states,  a  scrawl  made  with  a  pen  after 
a  party's  signature  is  a  good  seal,  if  the  instrument  on  its  face 
purports  to  be  a  sealed  instrument.  The  most  common  specialties 
are  deeds,  mortgages,  covenants  and  bonds.  Many  other  instru- 
ments, however,  are  executed  under  seal. 

46.  DELIVERY. — To  make  a  specialty  or  any  other  written 
contract  operative,  it  must  be  delivered  with  intent  that  it  shall  take 
effect  as  a  contract ;  but  if  a  person  merely  puts  his  seal  to  a  written 
agreement,  and  then  delivers  it,  intending  that  it  shall  take  effect 
as  a  contract,  it  becomes  obligatory  upon  him,  although  he  does 
not  sign  it. 

47.  At  common  law,  an  agreement  executed  under  seal  was  en- 
forceable, although  it  failed  to  express  a  consideration,  and  al- 
though no  consideration  was,  in  fact,  paid  or  received.  If  a  seal 
was  affixed  to  a  contract  after  a  party's  signature,  it  was  con- 
clusively presumed  that  the  agreement  was  executed  for  a  valuable 
consideration,  and  want  of  consideration  could  not  be  shown  in 
defence  to  a  suit  brought  to  enforce  the  agreement.  The  doctrine 
of  the  common  law  in  this  respect,  has  been  much  modified  by 
statute.  The  statutes  of  many  states  permit  want  of  consideration 
to  be  shown  in  defence  to  an  action  on  a  sealed  instrument.  Such 
statutes  have  been  adopted  in  California,  Iowa,  Kentucky,  Kansas, 
Indiana,  and  Missouri,  and  in  some  of  these  states  the  distinction 
between  sealed  and  unsealed  instruments  has  been  abolished.  The 
Missouri  statute  provides  that  a  seal  need  not  be  affixed  to  a  deed 
conveying  real  estate.  Lawson  on  Contracts,  Sec.  65 ;  R.  S.  of  Mo., 
1919,  Sec.  52159 ;  Aller  v.  AUer,  40  N.  J.  (Law)  446 ;  Williston  on 
Contracts,  Sees.  109,  217,  218. 

48.  WANT  OF  CONSIDERATION  A  GOOD  DEFENCE  IN 
EQUITY  TO  A  SUIT  FOR  THE  SPECIFIC  PERFORMANCE 
OF  A  CONTRACT  UNDER  SEAL.— But  even  where  the  common 


16 

law  is  still  in  force,  courts  of  equity  will  not  decree  the  specific 
performance  of  a  promise  executed  under  seal,  when  it  appears 
that  there  was  no  consideration  for  the  promise,  or  that  the  con- 
sideration was  totally  inadequate.  And  although  an  agreement  is 
executed  under  seal,  it  may  always  be  shown  in  defence  to  a  suit  on 
the  agreement,  that  it  was  founded  on  an  illegal  consideration,  or 
that  the  party  sued  was  induced  to  execute  it  through  fraud  or 
duress.  Thus  it  may  be  shown  that  the  consideration  of  a  bond 
executed  under  seal,  was  an  agreement  by  the  obligee  to  compound 
a  felony. 

49.  MERGER. — By  the  common  law,  if  the  parties  to  a  simple 
contract  subsequently  entered  into  a  contract  under  seal  covering 
the  same  subject-matter,  the  simple  contract  became  merged  in  the 
latter. 

50.  ALTERATION,  RESCISSION  AND  DISCHARGE  OF 
CONTRACTS  UNDER  SEAL  BY  ORAL  AGREEMENT.— A  con- 
tract under  seal  may  be  altered,  rescinded  or  discharged  by  a  sub- 
sequent oral  agreement,  made  on  a  sufficient  consideration;  but 
where  a  specialty  is  thus  modified  by  a  subsequent  oral  agreement, 
the  whole  contract  is  then  reg^xded  as  a  simple  contract  and  is 
so  treated.  ^H-^J 

ORAL  CONTRACTS. 

51.  Contracts  may  be  made  verbally,  and  when  so  made  they 
are  as  valid  as  if  made  in  writing,  unless  some  statute  requires 
them  to  be  in  writing.  A  statute  termed  the  Statute  of  Frauds, 
which  was  enacted  many  years  ago  in  England,  and  which  has  been 
adopted  in  most,  if  not  all,  of  the  states  in  this  country,  requires 
a  certain  class  of  contracts,  such  as  contracts  relating  to  lands,  or 
the  sale  of  an  interest  therein,  promises  to  become  responsible  for 
the  debts  of  others,  promises  that  are  not  to  be  fully  performed 
within  one  year,  and  contracts  for  the  sale  of  goods,  wares  and  mer- 
chandise above  a  certain  value  (generally  $30.00  or  upward),  to  be 
made  in  writing  to  render  the  same  enforceable.  There  are  some 
other  contracts,  such  as  notes  and  bills  of  exchange,  which,  of 
necessity,  must  be  made  in  writing  to  render  the  same  enforceable. 

52.  SIMPLE  CONTRACTS.— A  simple  contract,  partly  in 
writing  and  partly  oral,  is  regarded  as  an  oral  contract.    A  simple 


17 

contract  need  not  be  wholly  on  one  paper,  but  may  consist  of  a 
number  of  papers.  For  example,  a  contract  may  be  extracted 
from  a  voluminous  correspondence. 

53.  CONTEMPORANEOUS  ORAL  AGREEMENT  ALTER- 
ING CONTRACT. — When  parties  have  reduced  a  contract  to  writ- 
ing and  have  executed  it,  all  oral  bargainings  and  promises  ante- 
cedent to  the  signing  of  the  instrument  are  merged  in  the  instru- 
ment, which  is  presumed  to  state  all  that  the  parties  have  agreed 
to  do  or  perform.  Therefore,  in  a  suit  upon  the  contract  neither 
party  will  be  permitted,  by  verbal  testimony,  to  show  that  the 
terms  of  the  contract  were  different  from  what  they  appear  to  be 
on  the  face  of  the  instrument.  Thus,  if  a  written  contract  calls 
for  the  payment  of  money,  an  oral  contract  made  at  or  before  the 
execution  of  the  contract  to  pay  in  something  besides  money,  can- 
not be  proven.  So  if  a  deed  contains  a  covenant  of  warranty 
against  all  encumbrances,  it  cannot  be  shown  in  an  action  for  a 
breach  of  the  warranty,  that  by  an  oral  agreement  made  when  the 
deed  was  signed,  a  particular  mortgage  was  excepted  by  the  war- 
rantor ;  it  cannot  be  shown  by  oral  testimony  that  a  chattel  mort- 
gage was  to  cover  property  that  is  not  described  in  the  mortgage. 

54.  FOREGOING  RULE  DOES  NOT  EXCLUDE  ORAL 
PROOF  OF  FRAUD,  WANT  OF  CONSIDERATION,  ETC.— 
But  in  a  suit  of  law  to  enforce  a  written  contract,  the  defendant 
may  show,  by  way  of  defence  to  the  action,  and  by  oral  testimony, 
either  one  or  all  of  the  following  facts:  That  the  contract  was 
without  consideration;  that  the  consideration  of  the  contract  was 
illegal;  that  the  defendant  was  induced  to  sign  the  contract  by 
false  and  fraudulent  representations ;  that  he  was  compelled  to  exe- 
cute the  contract  by  duress,  or  that  the  contract  has  been  altered  in 
a  material  respect  since  it  was  executed. 

55.  SUITS  TO  ANNUL  CONTRACT  FOR  FRAUD,  OR  TO 
REFORM.— Sometimes  suits  are  brought,  not  to  enforce  a  written 
contract,  but  to  annul  it  on  the  ground  of  fraud  or  duress,  or  to 
reform  the  contract  on  the  ground  of  a  mistake  made  in  drafting 
it.  In  suits  of  this  character  it  is  permissible  to  prove  all  oral 
bargainings,  promises  and  representations  which  preceded  the  exe- 
cution of  the  instrument.  It  may  also  be  shown  oraUy  that  a  deed 
or  bill  of  sale,  absolute  on  its  face,  was  really  intended  as  a  mort- 


18 

gage.  And  where  an  oral  contract  is  made  contemporaneously  with 
a  written  one,  it  may  be  proven,  if  it  does  not  contradict  the  written 
agreement.  Thus,  if  A,  by  an  agreement  in  writing,  sells  and  con- 
veys property  to  B,  and  B  cotemporaneously  with  such  agreement 
enters  into  a  further  verbal  agreement  with  A,  that  if  A,  after  a 
time,  should  desire  to  sell  the  property,  he  will  take  it  back  at  a 
given  price,  this  latter  oral  agreement  may  be  proven.  Greenwalt 
V.  Kohne,  4  Norris,  Pa.  369. 

56.  SUBSEQUENT  AGREEMENT  ALTERING  CONTRACT : 
RECEIPT. — An  oral  agreement  modifying  or  changing  the  terms 
of  a  written  contract,  if  made  after  the  written  contract  is  exe- 
cuted and  delivered,  may  always  be  shown ;  or  if  a  written  contract 
shows  on  its  face  that  it  is  incomplete,  and  that  there  are  other 
stipulations  between  the  parties  not  expressed  in  the  writing — 
what  those  other  stipulations  are  may  be  shown  by  oral  testimony. 
A  mere  receipt  for  money  may  be  explained  by  oral  testimony,  or 
it  may  be  contradicted,  since  a  simple  receipt  for  money  is  not  re- 
garded as  a  contract.  The  true  date  of  a  written  contract  may  also 
be  shown,  although  it  differsjrom  the  date  stated  in  the  contract. 


CONTRACTS  CREATED  BY  LAW:  QUASI  CONTRACTS. 

57.  The  law,  in  many  cases,  assumes  that  a  promise  was  made, 
and  enforces  its  performance,  although  none  was  in  fact  made  or 
intended  to  be  made.  It  always  assumes  a  promise  on  the  part  of 
a  person  to  do  what  it  is  his  legal  duty  to  do.  For  example,  where 
a  man  ran  a  toll-gate  at  which  it  was  his  duty  to  pay  toll,  it  was 
held  that  he  might  be  sued  for  toll  as  upon  an  express  promise  to 
pay  the  same,  and  that  it  was  no  defence  that  he  did  not  promise  or 
intend  to  pay  toll.  Plank  Road  Company  v.  Lewis,  49  Ind.  161; 
Central  Bridge  v.  Abbott,  4  Gushing,  473.  It  is  a  husband's  duty 
to  support  his  wife  so  long  as  she  properly  discharges  her  duties 
as  a  wife ;  if  he  fails  to  do  so  and  a  third  person  supplies  her  with 
necessaries,  the  law  implies  a  promise  on  the  husband's  part  to  pay 
for  the  same,  which  may  be  enforced  although  the  husband  did  not 
so  promise  and  did  n-^t  intend  to  pay  for  them. 

58.  PROMISE  CREATED  AGAINST  ONE  NOT  COMPE- 
TENT TO  CONTRACT.— The  law  sometimes  creates  a  promise  on 
the  part  of  a  person  who  is  not  at  the  time  competent  to  make  a 


19 

contract.     For  example,  an  infant  may  be  compelled  to  pay  for 
necessaries  supplied  to  him  while  in  need.     In  this  instance,  how- 
ever, the  law  simply  creates  a  promise  to  pay  the  reasonable  value     0 
of  such  necessaries.     It  does  not  compel  the  infant  to  pay  more  /Jj2^ 
than  their  reasonable  value,  although  the  infant  may  have  ex-(jl 
pressly  promised  to  pay  more.    In  like  manner,  a  person  may  re-OHO  »  ^  j 
cover  the  reasonable  value  of  necessaries  furnished  in  good  faith 
to  an  insane  person,  on  the  strength  of  a  like  promise  created  or 
implied  by  law.     The  common  law  compels  a  husband,  who  is  a 
minor,  to  pay  the  ante-nuptial  debts  of  his  wife.    In  this  instance 
the  promise  is  created  by  law,  the  promisee  himself  not  being  com- 
petent to  contract  to  pay  the  debt  of  a  third  party.    A  physician, 
who  in  expectation  of  receiving  pay,  renders  medical  services  to  a 
person  who  has  been  rendered  insensible  by  an  accident  of  any 
kind — such  services  being  necessary  to  save  the  patient 's  life — may 
recover  compensation  of  the  patient,  on  a  promise  which  the  law 
creates,  although  he  was  employed  by  an  unauthorized   person. 
Bishop,  Sec.  231 ;  Williston  on  Contracts,  Sec.  240. 

59.  DEBT  OF  ANOTHER  PAID  UNDER  LEGAL  OBLI- 
GATION.— One  who,  in  pursuance  of  a  legal  obligation  so  to  do 
pays  another's  debt,  may  recover  the  amount  so  paid  from  the 
person  in  whose  behalf  it  was  paid.  For  example,  a  surety  may 
recover  from  his  principal  the  amount  of  a  suretyship  debt  which 
he  has  paid ;  or  the  surety  may  recover  from  his  co-sureties  their 
just  proportion  of  the  sum  by  him  expended,  when  he  has  himself 
paid  the  debt.  In  like  manner,  a  joint  promisor  who  has  paid  the 
whole  of  a  debt,  may  recover  from  another  joint  promisor  his  just 
proportion  of  the  debt  so  paid.  In  all  of  these  cases  the  recovery- 
is  upon  a  promise  which  the  law  creates  or  implies. 

60.  VOLUNTARY  PAYMENT  OF  THE  DEBT  OF  AN- 
OTHER. — Except  in  the  instances  last  mentioned,  one  who  pays 
the  debt  of  a  third  party  without  his  request,  cannot  recover  the 
sum  so  paid.  But  by  the  law  merchant,  one  who  pays  a  dishonored 
bill  of  exchange  under  protest,  to  protect  the  credit  of  the  drawer, 
may,  under  certain  conditions,  recover  the  amount  so  paid. 

61.  SERVICES  RENDERED  WITHOUT  REQUEST  AC- 
CEPTED.— Where  services  arc  rendered  to  a  person  and  they  are 
accepted  (the  services  being  such  as  are  usually  paid  for),  and 


20 

when  goods  are  delivered  to  and  accepted  by  a  party,  the  law,  in 
the  absence  of  an  express  promise,  will  imply  a  promise  to  pay  their 
reasonable  value,  although  the  work  was  done  or  the  goods  were 
furnished  without  request.  But  where  one  working  for  a  salary 
voluntarily  does  work  in  excess  of  his  duties,  without  any  agree- 
ment for  extra  compensation,  the  law  will  not  usually  imply  a 
promise  to  pay  for  such  extra  service.  Pew  v.  Gloucester  Nat. 
Bank,  130  Mass.  391,  396;  Bishop,  222;  Williston  on  Contracts, 
Sec.  91. 

62.  PUBLIC  OFFICERS.— As  public  officers  are  not  entitled 
to  compensation  for  public  service,  unless  the  law  gives  them  a 
salary,  and  as  they  can  only  claim  the  amount  allowed  by  statute 
for  doing  official  acts,  it  is  always  competent  for  the  legislature  to 
increase  the  duties  of  an  office  without  entitling  the  officer  to  re- 
ceive increased  compensation.  Because  the  duties  of  an  office  are 
increased,  the  law  does  not  create  or  imply  an  obligation  to  pay  an 
increased  salary. 

63.  MONEY  OBTAINED  BY  FRAUD  OR  DURESS.— Where 
money  is  wrongfully  obtained  by  fraud  or  duress,  the  law  creates 
a  promise  on  the  part  of  the  wrong-doer  to  refund  it,  which  promise 
may  be  enforced.  In  like  manner,  if  a  person  saves  property  which 
is  in  danger  of  being  lost  or  destroyed,  the  law  implies  a  promise 
on  the  part  of  the  owner  to  pay  for  such  services,  unless  it  appears 
that  he  had  abandoned  the  property.  This  is  termed  a  salvage 
service.  It  has  also  been  held  that  if  those  on  whom  the  duty  of 
burying  the  dead  is  imposed,  fail  to  do  so,  a  person  who  discharges 
the  duty  may  recover  the  expense  from  the  one  who  was  primarily 
liable  to  perform  the  duty.  The  recovery  in  such  a  ease  is  upon  a 
promise  which  the  law  creates  to  refund  the  expense.  Jenkins  v. 
Tucker,  1  H.  Bl.  90;  Ambrose  v.  Kerrison,  10  C.  B.  776;  Bishop, 
See.  237 ;  Williston  on  Contracts,  Sec.  348,  note  5. 

64.  MUTUAL  ASSENT.— The  parties  to  a  contract  may  mani- 
fest their  assent  thereto  by  signing  and  delivering  the  same,  if  it 
is  in  writing ;  or  by  word  of  mouth  when  it  is  oral ;  or  by  conduct 
and  actions  from  which  an  assent  to  its  terms  will  be  implied. 
When  a  contract  is  oral,  if  the  proposition  made  by  one  party  is 
not  understood  and  assented  to  by  the  opposite  party  in  the  sense 
in  which  it  was  made,  the  minds  of  the  parties  do  not  meet  and 


21 

neither  party  is  bound.  (Ante,  Sec.  14.)  But  when  a  contract  is 
in  writing  and  the  same  is  signed  and  delivered,  neither  party  will 
be  permitted  to  say  that  he  did  not  understand  the  agreement  and 
that  he  is  not  bound  thereby.  In  the  latter  case  the  delivery  of  the 
contract  is  conclusive  evidence  of  mutual  assent  to  all  of  its  pro- 
visions. 

65.  CONTRACTS  BY  LETTER  OR  TELEGRAPH.— When  a 
contract  is  made  by  letter  or  telegram,  the  parties  are  held  to  have 
assented,  and  the  contract  is  complete  as  soon  as  the  letter  of  accep- 
tance is  deposited  in  the  mail,  or  the  telegram  of  acceptance  is 
sent.  In  such  cases,  although  the  offer  has  been  withdrawn  by 
letter  or  telegram  before  the  letter  or  telegram  of  acceptance  is 
sent,  yet  if  the  letter  or  telegram  announcing  the  withdrawal  is  not 
received  before  the  letter  or  message  of  acceptance  is  sent,  the  con- 
tract is  complete. 

66.  THE  MAIL  OR  TELEGRAPH  THE  AGENT  OF  HIM 
WHO  MAKES  USE  OF  THE  SAME  TO  TRANSMIT  AN 
OFFER.— In  case  an  offer  is  made  by  mail  or  telegraph,  the  mail 
or  telegraph  is  regarded  as  the  agent  of  him  who  makes  the  offer, 
and  the  same  agency  may  be  used  to  transmit  the  acceptance  of 
the  offer,  unless  the  person  to  whom  the  offer  is  addressed  is  di- 
rected to  communicate  his  acceptance  in  some  other  way ;  hence,  if 
an  offer  made  by  telegraph  is  altered  in  the  course  of  transmission, 
and  the  offer  as  transmitted  is  accepted,  the  contract  becomes  bind- 
ing, notwithstanding  the  mistake.  Saveland  v.  Green,  40  Wis.  431 ; 
Lawson  on  Contracts,  Sees.  20  to  23 ;  Williston  on  Contracts,  Sees 
81  to  89. 

67.  RIGHT  TO  WITHDRAW  OFFER.— A  mere  offer  may  be 
withdrawn  at  any  time  before  it  is  accepted,  unless  a  consideration 
has  been  paid  to  let  the  offer  stand  open  for  a  given  time.  An 
offer  may  be  withdrawn  otherwise  than  by  actual  notice  that  it 
is  withdrawn,  as  where  before  the  acceptance  of  an  offer  to  sell, 
the  article  offered  for  sale  is  sold  to  another  party,  and  he  to  whom 
the  offer  was  made  becomes  aware  of  the  fact. 

68.  REASONABLE  TIME.— A  reasonable  time  only  is  allowed 
to  accept  an  offer,  hence  if  an  unreasonable  time  elapses  before 
notice  of  acceptance  is  given,  the  offer  is  regarded  as  withdrawn  by 
mere  lapse  of  time. 


22 

69.  QUALIFIED  ACCEPTANCE.— If  an  offer  made  is  ac- 
cepted with  any  reservations,  or  with  any  qualifications  of  the 
terms  of  the  offer,  the  contract  is  incomplete  until  the  modification 
of  the  terms  of  the  offer  has  been  assented  to. 

70.  ACCEPTANCE  IMPLIED  FROM  ACTS.— An  offer  may 
be  accepted  by  merely  acting  on  it,  as  where  goods  are  ordered  of 
a  merchant  and  he  ships  them  without  formally  notifying  the 
buyer  that  his  order  is  accepted;  and  where  a  reward  is  offered 
generally  to  anyone  who  apprehends  a  certain  criminal,  one  who 
acts  on  the  offer  and  apprehends  the  criminal  is  entitled  to  the 
reward.  In  the  latter  case,  however,  if  the  reward  is  offered  by 
public  advertisement,  it  may  be  withdrawn  in  the  same  way,  and  if 
the  notice  of  withdrawal  is  thus  given  before  the  criminal  is  appre- 
hended, the  reward  cannot  be  recovered,  although  the  notice  of  the 
withdrawal  was  not  in  fact  sg^^until  after  the  arrest. 


CONTRACTS,  HOW  EXECUTED— SIGNING. 

71.  A  contract  that  is  reduced  to  writing  and  is  assented  to 
orally  and  delivered,  is  valid,  although  it  is  not  actually  signed  by 
the  parties,  unless  it  is  a  contract  which  falls  within  the  provisions 
of  the  Statute  of  Frauds.  The  Statute  of  Frauds  requires  all 
agreements  relating  to  lands  and  certain  other  agreements  to  be 
made  in  writing  and  ' '  signed  by  the  parties  to  be  charged. ' ' 

72.  SIGNATURE,  WHAT  SUFFICIENT.— A  signature  in 
pencil  is  sufficient,  and  a  signature  is  sufficient  if  only  the  initials 
of  the  Christian  name  are  given.  Usually  a  person  will  be  bound 
by  whatever  name  he  chooses  to  adopt  to  evidence  his  assent  to  a 
contract.  The  place  of  signature  is  also  immaterial;  a  signature 
may  be  placed  at  the  beginning  or  the  end  of  a  contract,  if  it  is  so 
placed  to  evidence  one's  assent  to  the  contract. 

73.  A  party  to  a  contract  may  direct  his  name  to  be  signed  by 
a  third  party  in  his  presence,  and  such  signing  is  valid ;  it  is  also 
valid  if  his  name  is  written  by  another  while  he  touches  the  pen. 

74.  SIGNING  WITHOUT  READING.— One  who  signs  a  con- 
tract is  bound  by  it  although  he  does  not  read  it,  unless  its  contents 
are  falsely  read  or  represented  by  the  other  party.  It  is  usually 
no  defence  to  a  contract  that  a  party  did  not  read  it  and  did  not 


23 

understand  the  terms  of  the  agreement.  It  is  the  duty  of  a  party 
to  read  a  contract  before  signing  it,  and  if  he  neglects  to  do  so  he 
will  be  bound,  unless  he  was  induced  to  sign  it  by  false  representa- 
tions, or  by  some  deceit  practiced  by  the  opposite  party. 

75.  When  a  person  signs  a  contract  with  an  oral  or  unwritten 
stipulation  that  it  shall  not  become  binding  until  others  sign  it, 
the  party  so  signing  is  not  bound  until  the  others  sign  it  as  stipu- 
lated. 

76.  DELIVERY  NECESSARY  TO  RENDER  CONTRACT 
OPERATIVE.— After  a  written  contract  is  signed  it  does  not 
become  operative  until  it  has  been  delivered  and  accepted  with  the 
intent  that  it  shall  take  effect  or  become  operative.  But  a  formal 
or  manual  delivery  of  a  contract  is  not  always  essential  to  render 
it  operative.  For  example :  If  a  contract  is  signed  by  both  parties 
thereto  with  intent  that  it  shall  become  binding,  it  is  a  sufficient 
delivery  if  it  is  left  in  the  custody  of  one  of  the  parties,  or  in  the 
custody  of  a  third  person.  So,  if  a  person,  after  signing  a  contract, 
tenders  it  to  the  opposite  party,  intending  thereby  to  part  with  its 
custody,  and  the  latter  party  without  taking  it  into  his  hands  com- 
mits it  for  the  time  being  to  the  custody  of  the  maker,  the  delivery 
is  sufficient  to  render  the  instrument  operative. 

77.  DELIVERY  TO  AGENT.— The  delivery  of  a  contract  by 
one  party  thereto,  after  it  is  signed,  to  an  agent  of  the  opposite 
party,  or  the  depositing  of  the  same  in  the  mail  addressed  to  the 
opposite  party,  is  a  sufficient  delivery  so  far  as  the  party  doing  such 
acts  is  concerned.  And  the  receipt  and  retention  of  a  contract 
so  delivered,  without  objection  thereto,  would  constitute  a  sufficient 
acceptance  to  render  it  binding. 

78.  DELIVERY  PRESUMED.— Controversies  concerning  the 
delivery  of  contracts  most  frequently  arise  with  reference  to  in- 
struments like  deeds,  bonds  and  notes,  which  are  only  signed  by 
one  party.  Under  some  circumstances  the  law  will  presume  that 
an  instrument  has  been  delivered,  when  there  is  no  direct  evidence 
of  such  delivery.  For  example :  The  law  will  ordinarily  presume 
that  a  party  has  accepted  an  instrument,  such  as  a  bond,  note  or 
deed,  that  is  beneficial  to  him.  So  if  an  obligation  like  a  note  or 
bond  is  found  in  the  possession  of  the  payee  or  obligee,  or  in  the 
possession  of  his  agent,  a  presumption  arises  that  it  was  duly  de- 


24 

livered.  And  if  the  grantor  in  a  deed  signs  it  and  files  it  for 
record  in  the  proper  office,  such  act  will  be  regarded  either  as  a 
good  delivery  to  the  grantee,  or  a  prima  facie  evidence  that  it  was 
delivered  to,  and  accepted  by,  the  grantee  before  being  filed  for 
record. 

79.  DEED  RECORDED,  TRANSFERS  TITLE.— A  deed  for 
land,  if  duly  executed  by  the  grantor  and  by  him  filed  for  record 
in  the  proper  office,  operates  to  transfer  the  legal  title  to  the 
grantee.  Hence,  in  such  cases,  it  is  usually  unimportant  who  sub- 
sequently has  possession  of  the  deed.  But  if  the  deed,  as  drawn,  is 
not  signed  by  the  grantee,  and  it  contains  provisions  imposing  a 
liability  on  the  grantee,  he  will  not  be  bound  by  such  provisions 
unless  it  is  shown  that  he  accepted  the  deed.  For  example:  If 
the  deed  contains  an  obligation  binding  the  grantee  to  assume  and 
pay  a  mortgage  on  the  property,  the  grantee  will  not  be  bound 
without  proof  that  he  accepted  the  conveyance. 

80.  DELIVERY  IN  ESCROW.— When  a  contract  is  duly  exe- 
cuted by  the  parties  thereto,  and  the  same  is  placed  in  the  custody 
of  a  third  party  under  an  agreement  that  it  shall  not  be  delivered 
or  take  effect  until  the  happening  of  some  future  event,  such  de- 
livery is  termed  a  delivery  in  escrow. 

81.  UNAUTHORIZED  DELIVERY.— If  a  person  with  whom 
a  contract  is  thus  left  in  escrow  delivers  it  before  the  happening 
of  the  event,  the  contract  will  not  become  operative.  This  is  true 
of  the  delivery  of  all  contracts,  except  such  as  are  negotiable,  to 
wit :  bills  and  notes. 

82.  Generally  a  deed  held  in  escrow  and  delivered  by  the  holder 
on  the  happening  of  the  contingency,  takes  effect  as  of  the  date  of 
the  second  delivery;  but  in  some  cases  it  will  be  given  effect  by 
relation,  as  of  the  date  of  the  first  delivery.  Thus,  if  a  femme 
sole  makes  a  deed  and  places  it  in  escrow,  and  marries  before  the 
contingency  happens  on  which  it  is  to  be  delivered ;  or  if  a  person 
who  has  placed  a  deed  in  escrow  dies  before  the  happening  of  the 
contingency,  in  both  of  these  cases,  on  the  happening  of  the  con- 
tingency, after  the  marriage  or  death  of  the  grantor,  the  deed  may 
be  delivered,  and  it  will  be  regarded  as  taking  effect  by  relation 
as  of  the  date  of  the  first  delivery,  as  otherwise  it  would  be  inop- 
erative.   Bishop,  359,  360 ;  Williston  on  Contracts,  Sec.  212. 


25 

83.  LEAVING    DEED    AMONG    GRANTOR'S    PAPERS.— 

If  a  grantor  executes  a  deed  and  leaves  it  among  his  papers,  in- 
tending that  the  grantee  shall  find  it  at  his  death  and  record  it,  no 
title  passes  by  the  deed  when  found  and  recorded,  because  it  was 
not  delivered  in  the  lifetime  of  the  grantor.  But  if  the  grantor 
had  committed  the  deed  thus  fully  executed  and  acknowledged  to 
the  custody  of  a  third  party,  with  directions  to  deliver  it  to  the 
grantee  at  his  death,  and  had  reserved  no  right  of  control  over  it 
in  the  meantime,  or  power  to  reclaim  it,  such  deed,  if  delivered  by 
the  custodian  after  the  grantor's  death,  would  pass  the  title  and 
take  effect  as  of  the  date  of  the  first  delivery.  In  this  case,  how- 
ever, if  the  grantor  had  reserved  power  of  control  over  the  deed 
until  his  death,  nothing  would  pass  for  want  of  a  complete  delivery 
in  the  grantor's  lifetime. 

84.  ORAL  STIPULATION  CONCERNING  DEED  VOID.— 
It  has  been  held  that  if  a  deed  is  executed  by  the  grantor  and  de- 
livered to  the  grantee  under  a  verbal  stipulation  that  it  shall  not 
take  effect  until  some  future  time,  such  verbal  stipulation  is  void 
and  the  deed  becomes  immediately  operative.  Miller  v.  Fletcher, 
27  Grattan,  403.  In  such  case  the  oral  stipulation  cannot  be  in- 
corporated into  the  specialty  without  reducing  it  to  the  grade  of  a 
simple  contract.  Ante,  Sec.  50.  But  this  reasoning  will  not  apply 
to  a  simple  contract  thus  placed  in  escrow. 

*7/  INTERPRETATION  OF  CONTRACTS. 

85.  Although  a  contract  cannot  be  contradicted  by  verbal  testi- 
mony (Ante,  See.  53),  yet  to  attain  a  right  understanding  of  the 
contract,  and  of  the  intent  of  the  parties,  their  relations  to  each 
other  and  the  surroundings  at  the  time  the  contract  was  executed, 
may  be  looked  into.  When  such  extraneous  matters  are  considered, 
and  a  doubt  then  arises  as  to  the  meaning  of  the  contract,  it  may 
be  explained  by  verbal  testimony.  For  instance,  if  A  agrees  to 
sell  his  farm  in  the  County  of  St.  Louis,  without  further  descrip- 
tion, and  it  appears  from  extraneous  evidence  that  he  has  two 
farms  in  that  county,  verbal  testimony  may  be  given  to  show  which 
of  the  farms  was  intended.  This  is  termed  a  latent  ambiguity. 
But  if,  on  reading  an  instrument  and  without  reference  to  extran- 
eous matters,  the  meaning  of  the  same  cannot  be  made  out,  then 


26 

verbal  testimony  will  iiDt  be  received  to  explain  it.    The  ambiguity- 
is  then  patent. 

86.  PAROL  EVIDENCE  TO  IDENTIFY  SUBJECT-MAT- 
TER.— Parol  evidence,  however,  is  admissible  to  identify  the 
subject  matter  of  a  contract.  For  example:  If  A  agrees  with  B 
to  sell  the  latter  his  farm,  or  a  certain  number  of  horses,  without 
describing  the  property  intended  to  be  sold,  parol  evidence  will 
be  admitted  to  identify  the  property  which  the  parties  had  in  view 
when  the  contract  was  made. 

87.  If  a  contract  is  in  a  foreign  tongue,  the  meaning  of  the 
words  must  be  proven ;  but  if  in  our  language,  the  court  then  takes 
judicial  notice  of  their  meaning,  and  also  of  well  understood  abbre- 
viations like  C.  0.  D.  or  Adm.  But  the  meaning  of  abbreviations 
only  used  in  certain  localities,  and  not  generally  used,  must  be 
proven.  Local  usages  or  customs  must  also  be  proven.  Courts  do 
not  take  judicial  notice  of  the  same. 

88.  RULES  OF  INTERPRETATION.— The  following  are 
some  of  the  most  general  rules  which  govern  in  interpreting 
contracts : 

I.  A  contract  should  be  so  construed,  if  possible,  as  to  carry  out 
or  give  effect  to  the  intent  of  the  parties. 

II.  Parties  are  bound  by  the  meaning  of  the  words  they  have 
employed,  and  cannot  plead  ignorance  of  the  meaning  of  the  terms 
they  have  used,  no  more  than  they  can  plead  ignorance  of  the  law, 

III.  The  whole  of  the  contract,  whether  written  on  one  paper 
or  many,  must  be  looked  to,  in  order  to  arrive  at  the  intent  of  the 
parties. 

IV.  No  inaccuracy  in  the  use  of  language,  bad  grammar,  or 
omissions  of  words  or  phrases  evidently  intended  to  be  inserted,  will 
defeat  the  intent  if  clearly  manifest.  Or  may  be  read  as  and — may 
as  must — quarterly  as  annually— and  party  of  the  first  part  as 
party  of  the  second  part — if  necessary  to  carry  out  the  intent. 

V.  Contracts  should  be  so  construed,  if  possible,  as  to  give  effect 
to  all  the  words  and  clauses  which  they  contain. 

VI.  If  the  main  body  of  a  writing  or  agreement  is  followed  by 
a  proviso  wholly  repugnant  thereto,  the  proviso  must  be  rejected. 
For  example :  If  a  conveyance  in  fee  simple,  by  a  subsequent  clause 
of  the  deed  is  cut  down  to  a  less  estate,  it  is  usual  to  reject  the  latter 


27 

as  repugnant  to  the  grant.  So  if  a  policy  of  insurance  on  groceries 
which  does  not  cover  the  building,  contains  a  provision  that  the 
keeping  of  gunpowder  on  the  premises  insured  will  render  the  in- 
surance void,  the  provision  will  be  rejected.    55  Vt.  142. 

A  false  description  of  property  in  a  deed  will  be  rejected  when 
there  is  enough  in  the  deed  to  show  what  property  the  grantor 
in  fact  intended  to  convey. 

VII.  If  the  terms  of  a  contract  admit  of  two  meanings,  or  two 
ways  of  effecting  an  object,  one  of  which  is  lawful  and  the  other  un- 
lawful, the  law  will  presume  that  that  which  is  lawful  was  in- 
tended. 

VIII.  Words  and  phrases  will  be  understood  in  their  popular 
sense,  unless  they  relate  to  some  technical  subject,  such  as  a  trade 
or  an  art,  and  then  their  technical  meaning  will  be  given  to  them. 

89.  CONTRACT,  WHEN  VOID  FOR  UNCERTAINTY.— If 
after  applying  the  rules  for  the  interpretation  of  contracts,  and 
after  hearing  evidence  as  to  all  such  extraneous  facts  as  are  ad- 
missible, the  meaning  of  the  parties  to  a  contract  cannot  be  ascer- 
tained with  certainty,  the  contract  in  question  will  be  declared 
void  for  uncertainty. 

90.  PROVISIONS  IN  DEROGATION  OF  COMMON  LAW.— 
Provisions  in  a  contract  which  are  in  derogation  of  law— that  is, 
which  alter  the  rights  of  the  parties  as  they  would  be  at  law— are 
strictly  construed.  For  example:  Stipulations  in  bills  of  lading 
by  which  common  carriers  limit  their  common-law  liability,  are 
always  strictly  interpretated. 

91.  CONSTRUCTION  ADOPTED  BY  THE  PARTIES.— 
When  the  meaning  of  a  contract,  considered  as  a  whole,  is  doubt- 
ful, but  the  parties  thereto  by  their  acts  and  conduct  have  con- 
strued it  in  a  certain  way,  the  courts  will  adopt  the  construction 
which  the  parties  themselves  have  adopted.  Thus,  where  a  contract 
with  the  United  States  called  for  the  delivery  of  a  certain  quantity 
of  barley,  and  for  some  time  barley  had  been  delivered  in  sacks, 
the  contract  was  construed  as  requiring  a  delivery  in  sacks,  al- 
though it  was  silent  on  the  subject.  Robinson  v.  U.  S.,  13  Wallace, 
363;  Cent.  Trust  Co.  v.  Wab.  Ry.  Co.,  34  Fed.  Rep.  254. 

92.  WORDS  IN  WRITING  PREVAIL  OVER  THOSE  IN 
PRINT,— When  a  contract  is  made  on  a  printed  form,  words  in 


28 

writing  will  usually  prevail  over  words  in  print,  if  the  two  conflict. 
It  ia  also  a  maxim  which  courts  act  upon,  that  what  can  be  made 
certain  by  reference  to  documents,  memoranda  or  records  which 
are  referred  to  in  a  contract,  is  sufficiently  certain. 

93.  CUSTOM  AND  USAGE.— In  this  country  custom  and 
usage  are  synonymous  terms,  and  the  rule  is  that  a  custom  or 
usage  may  be  shown,  not  to  contradict  the  terms  of  the  agreement, 
but  to  explain  the  meaning  of  language  employed,  where  the 
meaning  is  either  equivocal  or  obscure,  and  also  to  ascertain  the 
extent  or  scope  of  the  contract.  Thus  evidence  has  been  received 
in  explanation  of  a  contract  which  contained  the  phrase  "a  thou- 
sand of  rabbits, ' '  that  by  usage  in  a  certain  locality  a  thousand  of 
rabbits  meant  100  dozen,  that  is  1200.  3  Barn  &  Adolph,  728.  And 
in  a  suit  on  a  contract  by  a  servant  for  a  year's  service,  as  the  con- 
tract did  not  specifically  state  how  many  days'  service  should  con- 
stitute a  year,  it  was  held  competent  to  show  a  usage  in  the  locality 
to  give  servants  certain  holidays.    5  Ad.  &  El.  303. 

94.  A  usage  that  will  be  permitted  to  control  the  interpre- 
tation of  a  contract  must  be:  1st,  Uniform,  and  known  to  the 
contracting  parties.  2nd,  Within  the  limits  where  it  prevails  it 
must  be  universal.  If  a  custom  is  shown  to  be  general  or  uni- 
versal, knowledge  of  its  existence  may  be  inferred. 

95.  USAGE  WILL  NOT  CHANGE  THE  LAW.— But  a  usage 
cannot  be  proven  to  change  the  law,  or  the  rights  of  the  parties  as 
they  are  at  law,  nor  to  change  the  meaning  of  unambiguous  words 
or  phrases.  Thus  where  certain  barrels  of  flour  had  been  sold  and 
an  order  had  been  given  by  the  vendor  on  his  foreman  for  delivery, 
it  was  held  that  a  custom  among  merchants  in  the  particular 
locality  to  regard  such  an  order  as  a  delivery,  was  not  admissible 
to  establish  a  delivery,  because  what  will  constitute  a  delivery  is 
a  question  of  law.  Cotton  Press  Co.  v.  Stanard,  44  Mo.  82.  It 
has  also  been  held  that  a  usage  cannot  be  proven  for  the  purpose  of 
showing  that  a  contract  to  construct  a  ' '  mahogany  counter ' '  meant 
a  counter  of  white  wood,  but  so  stained  as  to  appear  to  be  ma- 
hogany.   Greenstine  v.  Borchard,  50  Mich.  434. 

96.  USAGE  BETWEEN  INDIVIDUALS.— A  long-continued 
and  particular  course  of  dealing  between  two  persons  creates  a 
usage  as  between  them,  and  such  a  course  of  dealing  may  be  pre- 


29 

sumed  to  have  entered  into  a  contract  between  them,  and  may  be 
proven  for  the  purpose  of  aiding  the  court  in  the  interpretation  of 
the  contract. 

97.  ILLEGAL  CONTRACTS.— A  promise  to  do  an  unlawful 
act  will  not  be  enforced  under  any  circumstances  (ante,  Sec.  12)  : 
and  on  the  other  hand,  the  doing  of  an  unlawful  act  by  one  party 
to  an  agreement  is  not  a  valid  consideration  for  a  promise  by  the 
other  party  to  do  anything  in  return.  Hence  when  an  action  is 
brought  to  enforce  a  contract,  it  is  always  competent  to  show  that 
the  contract  is  unlawful,  and  if  such  fact  appears,  no  relief  will 
be  afforded  to  either  party.  Sometimes  the  unlawful  character 
of  a  contract  is  evident  from  the  agreement  itself,  but  more  fre- 
quently it  can  only  be  made  to  appear  by  extraneous  oral  testi- 
mony, and  such  testimony  is  always  admissible  for  that  purpose. 
Ante,  Sec.  54. 

98.  AGREEMENTS  OPPOSED  TO  PUBLIC  POLICY.— To 
render  a  contract  unlawful  in  the  sense  that  it  will  not  be  enforced, 
it  is  not  necessary  that  the  parties  thereto  should  undertake  to 
do  acts  that  are  expressly  prohibited  by  law,  for  if  the  parties 
to  an  agreement  engage  to  do  acts  that  are  detrimental  to  the  pub- 
lic welfare,  or  immoral,  the  agreement  is  unlawful  and  will  not  be 
enforced.  The  following  are  some  illustrations  of  contracts  that 
are  thus  opposed  to  public  policy : 

(a)  An  agreement  that  tends  to  obstruct  the  administration  of 
justice,  such  as  a  promise  to  pay  money  to  secure  immunity  from  a 
criminal  prosecution,  or  a  promise  to  pay  a  witness  for  refusing 
to  testify.  Baker  v.  Farris,  61  Mo.  389 ;  Porter  v.  Jones,  52  Mo. 
399 ;  Valentine  v.  Stewart,  15  Cal.  387. 

(b)  Generally  a  promise  to  pay  money  for  services  rendered 
in  influencing  legislative  proceedings,  or  official  action  of  any  sort, 
is  unlawful;  but  an  agreement  by  a  lawyer  to  appear  openly  be- 
fore a  legislative  committee  and  argue  the  merits  of  a  measure 
pending  before  it,  would  not  be  so  regarded.  Satterly  v.  Jones, 
3  Duer,  102 ;  Mills  v.  Mills,  40  N.  Y.  543 ;  Winpenny  v.  French,  18 
Ohio  St.  469 ;  Marshall  v.  B.  &  0.  R.  R.  Co.,  16  Howard,  U.  S.  314, 
335 ;  Reed  v.  Peper  Tobacco  Warehouse  Co.,  2  Mo.  App.  82. 

(e)  A  promise  by  a  candidate  for  a  public  office  to  divide  the 
fees  of  the  office  or  to  appoint  a  person  to  an  office,  in  consideration 
of  aid  and  influence  to  be  rendered  in  securing  his  election,  is  void. 


30 

Martin  v.  Wade,  37  Cal.  168 ;  Robertson  v.  Robinson,  65  Ala.  610 ; 
Hager  v.  Catlin,  18  Hun.  448. 

(d)  The  same  may  be  said  of  a  promise  by  an  officer  of  a  cor- 
poration to  resign  his  office  for  a  sum  of  money  to  be  paid ;  also  of 
an  agreement  by  a  stockholder,  for  a  consideration  paid  or  prom- 
ised, to  vote  for  a  person  for  a  corporate  office.  Forbes  v.  Mc- 
Donald, 54  Cal.  98 ;  Woodruff  v.  Wentworth,  133  Mass.  309. 

(e)  An  agreement  among  persons  in  trade  to  obtain  control 
of  the  market,  with  a  view  of  suppressing  competition  and  charging 
exorbitant  prices  for  any  of  the  necessaries  of  life,  is  illegal  and 
void.    Arnot  v.  Pittston  Coal  Co.,  68  N.  Y.  558. 

(f)  An  agreement  between  two  persons  to  defraud  the  public 
or  to  defraud  a  third  party,  is  unlawful,  as  where  a  physician  of 
reputation  agrees  that  another  physician  may  impersonate  him  at 
his  office  in  the  treatment  of  patients.  Jerome  v.  Bigelow,  66  111. 
452-454 ;  Sternberg  v.  Bowman,  103  Mass.  325. 

99.  TENDENCY  TO  INFLUENCE  VIOLATIONS  OF 
TRUST. — Contracts  are  sometimes  regarded  as  unlawful  from  their 
mere  tendency  to  induce  the  parties  thereto  to  commit  a  breach 
of  trust,  as  where  the  officers  of  a  corporation  entered  into  an 
agreement  to  purchase  claims  against  the  corporation  on  their  own 
account.  Egerton  v.  Brownlow,  4  H.  L.  Cases,  1;  McDonald  v. 
Houghton,  70  N.  C.  393. 

100.  WAGERS. — By  the  common  law,  as  enforced  in  the  Eng- 
lish Courts,  wagers  were  held  to  be  valid;  but  by  statute  (8  and  9 
Vic.  Chap.  109,  Sec.  18),  wagers  were  declared  to  be  void.  In  the 
United  States,  also,  wagers  have  been  very  generally  declared  to 
be  void  by  statute.  All  contracts  in  the  nature  of  wagers  are  there- 
fore unlawful  and  will  not  be  enforced.  For  example,  a  contract 
to  sell  goods  for  future  delivery,  where  no  delivery  is  intended  by 
either  party,  is  a  mere  wager  on  the  rise  and  fall  of  prices,  and 
will  not  be  enforced.  For  the  same  reason  that  the  contract  is  a 
mere  wager  on  the  duration  of  a  human  life,  the  courts  will  n6t 
enforce  a  policy  of  life  insurance,  if  the  person  to  whom  the  policy 
is  issued  has  no  interest  either  as  a  creditor  or  dependent  relative 
in  the  life  of  the  person  assured.  Warnock  v.  Davis,  104  U.  S.  775. 
779 ;  Cammock  v.  Lewis,  15  Wall.  643. 

101.  CONTRACTS  IN  RESTRAINT  OF  TRADE.— The 
courts  will  not  enforce  a  contract  whereby  a  person  utterly  pre- 


31 

eludes  himself  from  following  any  lawful  trade  or  avocation  at  any 
place,  as  where  one  promises  generally  not  to  exercise  his  skill  as 
an  inventor.  Albright  v.  Teas,  10  Stew.  Ch.  171 ;  but  in  many  cases 
a  business  or  professional  man,  in  selling  out  his  business  or  prac- 
tice to  another,  may  lawfully  promise  not  to  follow  that  business 
or  engage  in  that  profession  at  a  particular  place  or  places,  within 
a  certain  territory.  The  general  doctrine  is  that  agreements  in 
restraint  of  trade  of  the  kind  last  mentioned,  will  be  enforced  if  the 
restraint  is  reasonable. 

102.  RESTRAINT,  WHEN  REASONABLE.— If  a  stipulation 
not  to  engage  in  a  given  business  'within  a  specified  territory,  is 
no  more  comprehensive  as  to  the  territory  described  than  is  neces- 
sary to  fairly  protect  the  purchaser  in  the  enjoyment  of  the  good 
will  of  the  business  or  practice  which  he  has  acquired,  then  the 
restraint  is  reasonable,  provided  the  other  person  is  not  utterly 
precluded  from  following  his  calling  at  any  place.  Oregon  Steam 
Navigation  Co.  v.  Winsor,  20  Wall,  64,  69. 

103.  IMMORAL  CONTRACTS.— A  promise  to  do  an  immoral 
act  is  void,  therefore  no  recoverery  can  be  had  for  supplies  or  money 
which  one  knowingly  furnishes  to  another  to  enable  him  or  her  to 
pursue  an  immoral  avocation.  Pearce  v.  Brooks,  L.  R.  1  Ex.  213, 
217. 

104.  CARRYING  ON  BUSINESS  WITHOUT  LICENSE.— 
If  the  law  requires  a  person  to  take  out  a  license  before  engaging 
in  a  particular  trade  or  calling,  one  engaging  in  that  particular 
trade  or  calling  without  a  license  cannot  recover  for  goods  sold  or 
services  rendered  while  so  carrying  on  such  unlicensed  business. 
For  example,  a  broker  cannot  recover  for  brokerage  services 
rendered  without  a  license,  if  the  law  requires  him  to  be  licensed ; 
and  wages  earned  by  a  minor  in  a  business  in  which  it  is  unlawful 
to  employ  minors  cannot  be  recovered  by  a  father  who  has  know- 
ingly placed  the  minor  in  such  service.  Birkett  v.  Chatterton,  13 
R.  I.  299. 

105.  CONTRACTS  MADE  ON  SUNDAY.— Contracts  made  on 
the  Lord's  day  are  valid,  unless  a  local  statute  prohibits  the  doing 
of  any  work  on  that  day.  In  most  of  the  states  of  this  Union  there 
are  statutes  prohibiting  the  doing  of  any  work  on  Sunday;  other 


32 

than  "works  of  necessity  and  charity."     Sheffield  v.  Bahner,  52 
Mo.  474-477. 

106.  EXECUTED  ILLEGAL  CONTRACTS.— When  an  illegal 
contract  has  been  executed,  the  courts  will  not  lend  their  aid  to 
undo  what  has  been  done  or  to  compel  the  restitution  in  whole  or 
in  part  of  money  paid  or  property  transferred  in  pursuance 
thereof.  But  in  one  case  it  was  held  that  a  partner  would  be  com- 
pelled to  account  to  his  copartner  for  money  realized  in  an  un- 
lawful venture,  it  appearing  that  the  accounting  did  not  relate 
exclusively  to  profits  made  in  the  unlawful  venture,  and  that  all 
the  firm  ventures  had  been  consummated,  and  that  the  money  real- 
ized therefrom  was  in  the  possession  of  one  of  the  partners,  when 
the  suit  for  an  accounting  was  brought.  Brooks  v.  Martin,  2  Wal- 
lace, 18. 

107.  IMPOSSIBILITY  OF  PERFORMANCE.— An  agreement 
between  two  parties  to  do  what  both  know  to  be  impossible,  is 
void.  But  a  contract  is  valid  where  one  of  the  parties  is  ignorant 
of  the  fact  that  it  cannot  be  performed  and  the  other  has  such 
knowledge,  as  where  a  man  and  woman  enter  into  a  marriage  en- 
gagement, the  latter  not  knowing  that  the  former  is  already  married. 
In  such  a  case  she  may  maintain  an  action  for  damages.  KeUy  v. 
Riley,  106  Mass.  339 ;  Wild  v.  Harris,  7  C.  B.  999. 

108.  CONDITION  PRECEDENT.— When  one  party  to  a  con- 
tract binds  himself  to  do  a  given  act,  only  after  the  other  party 
has  fully  performed  a  certain  promise,  the  first  party  is  under  no 
obligation  to  do  what  he  has  contracted  to  do  until  the  other  party 
has  complied  with  his  undertaking.  Thus,  where  a  sailor  was  to 
be  paid  a  specified  sum,  on  condition  that  he  did  duty  as  mate 
until  his  ship  reached  Liverpool,  and  he  died  before  its  arrival,  it 
was  held  that  nothing  could  be  recovered.  Cutter  v.  Powell,  6 
T.  R.  320,  322 ;  Smith  L.  C.  1.  But  at  the  present  day  it  would 
probably  be  held  in  such  a  case  that  the  reasonable  value  of  the 
service  rendered  might  be  recovered,  although  a  suit  on  the  con- 
tract could  not  be  maintained.  Gibson  v.  Turner,  6  N.  H.  481; 
Yeats  V.  Ballentine,  56  Mo.  530;  Eyerman  v.  Mt.  Sinai  Cem.  Ass'n, 
61  Mo.  489. 

109.  SUBJECT-MATTER  NON-EXISTENT,  OR  CEASING 
TO  EXIST. — If  at  the  time  a  contract  is  entered  into,  the  thing 


33 

to  which  the  contract  relates  has  no  existence,  and  both  parties  are 
ignorant  of  the  fact,  the  agreement  is  void  for  the  reason  that  it 
was  entered  into  under  a  mutual  mistake  of  fact.  Also  where  a 
contract  is  entered  into  on  the  assumption  that  the  thing,  to  which 
the  contract  relates,  will  continue  to  exist,  Dut  before  the  time  for 
performance  arrives,  it  is  destroyed  without  the  fault  of  either, 
the  contract  is  at  an  end.  For  example,  where  a  hall  was  let  for 
an  entertainment  at  a  future  day,  and  before  the  day  arrived  the 
hall  was  accidently  destroyed  by  fire,  it  was  held  that  the  lessee 
could  not  recover  damages,  because  the  agreement  was  entered 
into  on  the  implied  condition  that  the  lessor  should  not  be  bound 
if  the  hall  was  accidentally  destroyed.  Taylor  v.  Caldwell,  3  B. 
&  S.  826. 

110.  OBSTACLES  OR  ACCIDENTS  PREVENTING  PER- 
FORMANCE,  NO  EXCUSE.— When  a  person  contracts  to  do  a 
given  act  he  pledges  himself  as  having  the  capacity  to  do  it,  and 
assumes  the  risk  of  being  prevented  from  performing  his  contract 
by  obstacles  or  accidents ;  against  obstacles  and  accidents  that  may 
interfere  with  performance,  he  should  protect  himself  by  contract. 
Having  promised  generally  to  do  a  thing,  he  cannot  allege  that 
difficulties  and  obstacles  prevented  him  from  fulfilling  his  con- 
tract, although  they  did  in  fact  render  the  doing  of  the  thing  by 
him  impossible.  He  is  bound  to  do  whatever  any  human  being  has 
the  power  to  accomplish.  Ford  v.  Cotesworth  L.  R.  4,  Q.  B.  134 ; 
Kearon  v.  Pearson,  7  H.  &  N.  386 ;  Hills  v.  Sughrie,  15  M.  &  W.  253. 

111.  But  when  it  becomes  impossible  for  any  one  to  do  the 
act  contracted  to  be  done,  by  reason  of  an  act  of  God  or  the  public 
enemy,  the  better  view  is  that  the  party  is  excused  from  per- 
formance. The  act  of  God  here  referred  to  is  some  manifestation 
of  the  powers  of  nature  which  man  has  not  contributed  to  and  can- 
not overcome — such  as  fires  caused  by  lightning,  but  not  by 
accident.     Bishop,  590;  Williston  on  Contracts,  Sec.  1090. 

112.  PERFORMANCE  RENDERED  IMPOSSIBLE  BY 
LAW. — A  person  will  be  excused  from  performing  a  contract, 
when  after  it  is  made  the  law  forbids  its  performance.  For  ex- 
ample, a  contract  of  affreightment  will  be  dissolved  by  a  declar- 
ation of  war  rendering  it  unlawful  to  carry  it  out;  a  covenant 
to  defend  the  title  to  a  slave  during  his  life,  is  not  broken  by  a 


34 

law  emancipating  the  slave.  See  also  Atkinson  v.  Ritchie,  10  East 
534;  Bailey  v.  DeCrespigny,  L.  R.,  4  Q.  B.  180;  Jones  v.  Judd,  4 
N.  Y.  412.  And  where  judicial  process,  such  as  an  injunction,  in- 
tervenes to  prevent  the  doing  of  an  act,  it  is  a  valid  excuse  for  its 
non-performance.    U.  S.  v.  St.  L.,  A.  &  T.  R.  Co.,  43  Fed.  Rep.  414. 

113.  DUTY  DEVOLVED  BY  LAW,  EXCUSED  BY  ACT 
OF  GOD. — When  a  duty  is  devolved  on  a  person  by  law  and  not 
by  an  express  contract,  an  act  of  God  rendering  its  performance 
impossible  will  excuse  performance.  On  this  ground  common 
carriers  are  sometimes  discharged  from  the  legal  obligation  to 
carry  safely.  It  was  held,  however,  that  a  corporation  that  had 
contracted  to  pay  one-third  of  the  expense  of  renewing  and  re- 
pairing a  bridge,  during  a  term  of  years,  was  bound  thereby  to 
help  repair  the  structure  although  it  was  blown  down  by  a  cyclone. 
Cent.  Trust  Co.  v.  Wabash,  St.  L.  &  P.  Ry.  Co.,  31  Fed.  Rep.  440. 

114.  ACCIDENT    PREVENTING    PERFORMANCE.— If    a 

person  contracts  to  build  a  house  on  another's  land,  he  is  not  dis- 
charged from  his  promise  although  it  is  destroyed  by  an  accidental 
fire  while  in  process  of  erection.  The  same  rule  applies  to  a 
printer  who  bargains  to  supply  and  delivers  a  certain  number  of 
books  and  suffers  a  loss  of  his  premises  by  fire,  before  the  rest  are 
completed.  A  covenant  to  pay  the  rent  of  a  house  under  lease  is 
not  discharged  either  by  an  accidental  fire  or  one  occasioned  by 
' '  an  act  of  God. ' '  In  the  last  illustration  given  the  reason  is,  that 
the  lease  vests  the  lessee  with  an  interest  in  the  land,  which  is  not 
destroyed;  the  act  of  God  does  not  render  the  payment  of  rent 
impossible. 

115.  CONSIDERATION  FAILING  THROUGH  ACT  OF 
GOD. — If  a  person  is  not  able  to  receive  the  consideration  for  a 
promise,  his  promise  to  pay  for  that  which  he  could  not  receive 
will  not  be  enforced.  For  example,  where  a  student  who  had  con- 
tracted to  pay  a  certain  sum  for  tuition,  could  not  receive  instruc- 
tion on  account  of  sickness,  he  was  held  discharged  from  his  prom- 
ise.   Stewart  v.  Loring,  5  Allen  306. 

116.  ACTS  THAT  CANNOT  BE  DONE  BY  PROXY.— 
One  who  contracts  to  do  an  act  or  that  another  shall  do  an  act 
that  cannot  be  done  by  proxy,  is  released,  if  an  act  of  God,  such 
as  sickness  or  death,  prevents  performance.    Hall  v.  Wright,  96  E. 


35 

C.  L.  R.  793 ;  Robinson  v.  Davison,  L.  R.  6  Ex.  269 ;  Farrow  v. 
Wilson,  L.  R.  4  C.  P.  774;  Scully  v.  Kirkpatrick,  79  Pa.  St.  324. 
For  the  same  reason  a  surety  is  not  bound  by  a  recognizance  for 
his  principal's  appearance  on  a  given  day,  if  before  the  day  the 
principal  dies.  But  whenever  the  act  may  be  done  by  proxy,  as 
where  a  carpenter  agrees  to  erect  a  house,  his  sickness  or  death, 
does  not  discharge  the  promise.  Some  other  person  may  do  the 
act  as  well  as  he. 

117.  AGREEMENTS  TO  DO  ACTS  IN  THE  ALTERNA- 
TIVE.— Where  a  person  agrees  to  do  one  of  two  things  in  the  al- 
ternative, the  impossibility  of  doing  one  act  is  no  excuse  for  not 
doing  the  other. 

118.  CONTRACTS  VOID  AND  VOIDABLE.— A  void  contract 
is  one  that  has  no  effect  whatever.  Thus  a  void  deed  or  bill  of 
sale  conveys  no  title  and  may  be  impeached  by  any  one.  On  the 
other  hand,  a  voidable  contract  is  one  which  will  not  be  enforced, 
if  one  of  the  parties  objects  to  its  enforcement.  Furthermore,  void 
contracts  are  incapable  of  ratification,  whereas,  voidable  contracts 
may  be  ratified. 

119.  Contracts  are  voidable  under  the  following  circumstances: 
When  they  are  without  consideration;  when  the  consideration  is 
illegal;  when  they  are  procured  by  fraud  or  executed  under 
duress ;  also  when  the  parties  .thereto  are  incompetent  to  contract, 
except  in  the  case  of  contracts  made  by  married  women. 

120.  EXECUTED  CONTRACTS.— A  suit  cannot  be  success- 
fully maintained  to  rescind  an  executed  contract,  merely  because 
the  contract  when  made  was  without  consideration  or  because  the 
consideration  was  illegal.  Ante,  /Sec.  36.  If  a  person  pays  money 
or  delivers  property  in  execution  of  a  promise  that  was  not  en- 
forceable for  want  of  a  consideration,  neither  the  money  so  paid 
nor  the  property  delivered  can  be  recovered.  Moreover,  as  all 
persons  are  conclusively  presumed  to  know  the  law,  if  money  is 
voluntarily  paid  under  a  mistake  of  law,  it  cannot  be  recovered. 
For  example:  If  a  person  voluntarily  pays  a  tax  which  has  been 
illegally  assessed,  the  money  so  paid  cannot  be  recovered. 

121.  MISTAKE  OF  FACT.— But  if  while  laboring  under  a 
mistake  of  fact,  a  man  pays  money,  he  may  recover  it.     For  ex- 


36 

ample :  If  A,  intending  to  pay  money  to  B,  by  mistake  pays  it  to 
C,  he  may  recover  the  amount  so  paid.  United  States  v.  Park 
Bank,  6  Fed.  Rep.  852.  And  when  a  person  has  been  induced  to 
pay  money  through  fraud,  or  has  been  compelled  to  pay  it  by 
duress,  he  may  recover  it.  In  such  cases,  the  law,  as  we  have  seen, 
creates  a  promise  on  the  part  of  the  wrong-doer  to  refund  it. 
Ante,  See.  63. 

122.  "When  an  oral  contract  that  is  not  enforceable  under  the 
Statute  of  Frauds,  is  executed  on  one  side,  as  by  the  payment  of 
the  consideration,  the  money  so  paid  cannot  be  recovered  if  the 
other  party  is  willing  to  execute  the  contract  on  his  part. 

Thus,  one  who  has  paid  for  land,  under  an  oral  contract  of  sale, 
cannot  recover  the  money  so  paid  if  the  vendor  is  willing  to  con- 
vey. And  on  the  other  hand,  one  who  has  accepted  a  conveyance 
of  land  under  an  oral  contract  of  sale,  must  pay  the  purchase 
money.  Beaman  v.  Buck,  9  Smede  &  Marshal,  207;  Galley  v. 
Galley,  14  Neb.  174. 

123.  EFFECT  OF  FRAUD  ON  CONTRACTS.— It  is  a  general 
rule  that  fraud  vitiates  all  contracts :  that  is  to  say,  fraud  renders 
a  contract  voidable  at  the  election  of  the  defrauded  party.  Thus, 
if  one  who  has  not  read  a  contract  is  induced  to  sign  it  by  a  mis- 
representation of  its  contents  by  the  other  party  or  his  agent,  he 
will  not  be  held  bound  by  it  unless  the  contract  happens  to  be  a 
negotiable  note  or  bill  which  has  passed  into  the  hands  of  an  inno- 
cent holder  for  value. 

And  where  a  person  has  been  induced  to  enter  into  a  bargain 
by  a  misrepresentation  of  some  material  fact — as  where  he  is  in- 
duced to  buy  an  unsound  horse  on  the  representation  that  it  is 
sound — the  contract  is  voidable  at  the  election  of  the  defrauded 
party. 

124.  FRAUD  THAT  WILL  RENDER  A  CONTRACT  VOID- 
ABLE.— A  representation  made  by  one  party  to  a  contract  as  an 
inducement  to  the  other  party  to  execute  it  will  render  the  contract 
voidable  when  the  following  facts  are  established :  First,  that  the 
representation  made  was  false  and  was  known  to  be  false  by  the 
person  who  made  it;  Second,  that  the  statements  made  were  not 
obviously  untrue,  and  were  in  fact  believed  to  be  true  by  the 
person  to  whom  they  were  made,  and  that  he  was  thereby  induced 


37 

to  enter  into  the  agreement ;  Third,  that  the  representation  which 
was  made  consisted  in  a  statement  of  some  material  fact  or  facts 
relative  to  the  subject-matter  of  the  agreement. 

It  is  not  neccessary,  however,  to  show  that  the  false  statements 
made  were  the  sole  inducement  to  the  contract.  It  is  sufficient  to 
render  the  contract  voidable  if  the  contract  would  not  have  been 
made  but  for  such  false  statements.  Sioux  National  Bank  v.  Nor- 
folk State  Bank,  12  U.  S.  App.  347. 

125.  If  a  false  representation  is  made  knowingly  and  is  be- 
lieved and  acted  on,  it  will  generally  vitiate  the  contract,  although 
the  party  deceived  had  an  opportunity  to  ascertain  its  falsity ;  still, 
when  it  appears  that  he  had  such  opportunity,  it  will  in  many 
cases  be  inferred  that  he  did  not  rely  on  the  misrepresentation  and 
was  not  in  fact  deceived.  The  law  more  readily  assumes  that  the 
defrauded  party  relied  on  the  false  statements  made  to  him,  if  he 
was  drunk  or  weak-minded  when  the  contract  was  made;  it  will 
also  readily  assume  that  confidence  was  reposed  in  representations 
made,  when  the  parties  to  the  contract  occupy  a  confidential  re- 
lation to  each  other,  such  as  guardian  and  ward,  client  and  attorney, 
principle  and  agent. 

126.  REPRESENTATIONS  RECKLESSLY  MADE  WHICH 
WERE  NOT  KNOWN  TO  BE  TRUE.— In  an  action  for  fraud 
and  deceit  in  inducing  another  to  enter  into  an  agreement,  it  is 
not  always  necessary  to  show  that  the  person  making  the  repre- 
sentation complained  of  knew  the  same  to  be  false.  For  example: 
It  has  been  held  that  a  person  who,  for  the  purpose  of  inducing 
another  to  enter  into  an  agreement,  affirms  a  certain  thing  to  be 
true  as  of  his  own  knowledge,  which  he  does  not  know  to  be  true, 
and  which  is  in  fact  untrue,  is  as  culpable  as  one  who  states  what 
he  knows  to  be  false.  Pomeroy  v.  Benton,  57  Mo.  531 ;  Dunn  v. 
White,  63  Mo.,  181,  185.  It  has  also  been  held  that  a  statement 
recklessly  made  without  knowledge  of  its  truth,  which  proves  to 
be  untrue,  is  a  false  statement  knowingly  made  such  as  will  support 
an  action  for  fraud  and  deceit.  Cooper  v.  Schlesinger,  111  U.  S. 
148 ;  Barnes  v.  Union  Pacific  Railway  Company,  54  Fed.  Rep.  87. 

127.  HIDDEN  DEFECTS  KNOWN  TO  SELLER.— When 
persons  are  bargaining  about  an  article  equally  open  to  the  in- 
spection and  knowledge  of  each,  the  law  does  not  regard  mere 


38 

commendations  of  the  article  by  the  seller  as  a  fraud;  but  if  the 
article  has  some  hidden  defects  not  visible,  the  vendor  must  dis- 
close the  defect  if  known  to  him.  Praising  an  article  under  such 
circumstances,  the  defect  being  known  to  the  seller,  is  a  fraud. 

128.  EXPRESSIONS  OF  OPINION— PROMISSORY  REP- 
RESENTATIONS.— Mere  expressions  of  opinion  as  to  the  value  of 
an  article  and  representations  concerning  it  as  to  what  will  happen 
in  the  future  will  not  vitiate  a  contract.  For  example :  if  a  person 
selling  land  represents  that  a  railroad  will  shortly  be  built  in  the 
vicinity  of  the  land,  which  will  enliance  its  value,  the  representa- 
tion in  question  does  not  amount  :o  a  legal  fraud,  although  the 
Toad  is  not  built  and  the  seller  did  not  expect  it  to  be  built. 
To  render  a  contract  voidable  for  fraud,  there  must  be  a  false 
representation  as  to  some  existing  matter  of  fact. 

129.  But  if  a  person  buys  goods  on  credit  with  a  preconceived 
intent  not  to  pay  for  them,  the  contract  is  voidable  for  fraud, 
and  no  title  to  the  goods  passes  to  the  vendee  if  the  vendor  elects 
to  treat  the  sale  as  void. 

130.  FRAUDULENT  CONTRACTS  VOIDABLE.— Contracts 
affected  by  fraud  as  above  indicated  are  voidable,  not  void.  The 
defrauded  party  is  alone  entitled  to  avoid  the  contract,  whereas 
the  other  party  is  bound.  Furthermore,  if  a  party  fraudulently 
acquires  goods  or  lands  of  another,  and  then  sells  the  same  for 
value  to  an  innocent  purchaser,  the  latter  gets  a  good  title  notwith- 
standing the  fraud.  The  result  would  be  different  if  a  fraudulent 
contract  was  utterly  void.  In  that  event  the  innocent  purchaser 
would  acquire  no  titile,  as  is  the  case  when  stolen  property  is 
purchased  by  a  person  who  is  ignorant  of  the  theft. 

^  131.  REMEDIES  FOR  FRAUD.— The  defrauded  party  on 
'''  ^^'discovering  the  fraud,  may  act  in  one  of  three  ways.  He  may 
^C\^  rescind  the  contract,  he  may  ratify  it,  or  he  may  sue  for  the 
^  I  damages  sustained  in  consequence  of  the  deceit. 

132.  RESCISSION  OF  CONTRACT.— Rescission  consists  in 
giving  back  that  which  has  been  obtained  under  a  contract,  and 
reclaiming  what  has  been  parted  with,  whether  it  be  money  or 
property. 


39 

133.  RIGHT  TO  RESCIND— WHEN  EXERCISED.— A  per- 
son who  elects  to  rescind  a  contract  for  fraud  must  do  so  promptly 
after  discovering  the  fraud,  or  the  right  to  rescind  will  be  lost. 
A  party  cannot  rescind  a  contract  for  fraud  if  the  rights  of  inno- 
cent third  parties  have  attached,  and  he  cannot  rescind  unless 
both  parties  can  be  placed  in  substantially  the  same  position 
which  they  occupied  when  the  contract  was  made. 

134.  RATIFICATION.— Any  act  done  after  the  discovery  of 
the  fraud  by  the  defrauded  party,  that  treats  or  recognizes  the  con- 
tract as  being  still  in  force,  is  a  ratification.  Thus  one  who  has  been 
defrauded  of  his  goods,  by  bringing  a  suit  for  the  purchase  price, 
thereby  affirms  or  ratifies  the  sale. 

135.  REMEDIES  AT  LAW.— Although  a  party  may  have 
lost  his  right  to  rescind  a  contract,  yet  he  may  bring  a  suit  for  the 
damages  which  he  has  sustained  in  consequence  of  the  fraud ;  or  if 
he  is  sued  by  the  other  party  in  an  action  to  enforce  the  contract, 
he  may  plead  the  fraud  as  a  complete  defence,  if  the  right  to 
rescind  is  not  lost.  If  the  right  to  rescind  is  lost,  he  may  never- 
theless offset  against  a  recovery,  all  such  damages  as  he  has  sus- 
tained in  consequence  of  the  fraud. 

C^  CONTRACTS  ENTERED  INTO  BY  MISTAKE. 

136.  When  the  subject-matter  of  a  contract,  contrary  to  the 
belief  of  the  parties,  has  no  existence,  the  contract  is  void.  Ante, 
Sec.  109.  Thus  a  deed  given  ostensibly  for  land  which  has  no  ex- 
istence will  not  discharge  the  debt  to  discharge  which  the  deed  was 
given.  Counterfeit  money  believed  to  be  genuine  and  given  to  dis- 
charge a  debt,  will  not  discharge  it.  But,  if  only  one  party  to  a 
contract  labors  under  a  mistake,  and  the  other  is  in  nowise  respon- 
sible for  it,  the  contract  is  valid.  Thus,  where  an  agent  of  a  rail- 
road, intending  to  name  a  rate  for  the  transportation  of  coke, 
inadvertently  used  the  word  ''coal"  instead  of  ''coke",  and  the 
opposite  party  accepted  the  rate  as  offered,  being  ignorant  of  the 
mistake,  the  contract  was  held  valid.  Central  Trust  Co.  v.  Wa- 
bash etc.  Railway  Co.,  38  Fed.  Rep.  562. 

137.  MUTUAL  MISTAKE  OF  FACT  RENDERS  THE  CON- 
TRACT AS  MADE  VOIDABLE.— When  the  parties  to  a  contract 
act  under  a  mutual  mistake  as  to  some  matter  of  fact,  by  virtue  of 


40 

which  the  contract  does  not  express  what  the  parties  intended  it 
to  express,  it  is  not  enforceable,  but  such  a  contract  may  generally 
be  reformed  by  a  court  of  equity  so  as  to  conform  the  same  to  the 
intentions  of  the  parties.  It  is  a  general  rule  that  courts  of  equity 
will  correct  mistakes  of  fact  in  a  written  agreement,  but  that  they 
will  not  correct  mistakes  of  law.  Thus,  in  the  absence  of  fraud,  a 
party  to  a  contract  cannot  escape  the  obligations  imposed  upon  him 
by  the  contract  because  the  legal  obligation  imposed  thereby  is  not 
what  he  supposed  it  to  be ;  but  if  in  drafting  a  contract  a  mistake 
is  made  in  describing  property  to  vv^hich  the  contract  relates,  or 
if  any  other  mistake  of  fact  is  made,  the  mistake  will  be  corrected. 
When  a  scrivener  employed  to  draw  a  deed,  by  mistake  misde- 
scribes  the  land  intended  to  be  conveyed,  a  court  of  equity  will 
reform  the  deed ;  but  the  proof  in  all  such  cases  must  be  clear,  and 
even  in  such  cases  the  rights  of  third  parties  acquired  in  good 
faith  will  not  be  disturbed. 

138.  MISTAKES  OF  LAW.— There  is  one  well  established  ex- 
ception to  the  general  rule  stated  in  the  last  section,  that  courts 
will  not  correct  mistakes  of  law,  namely;  when  persons  undertake 
to  reduce  a  previous  oral  agreement  to  writing,  if,  through  a  mis- 
take of  law,  the  written  agreement  is  so  framed  that  it  does  not  ex- 
press the  terms  of  the  previous  oral  agreement,  but  differs  there- 
from in  legal  effect,  a  court  of  equity  will  rectify  the  mistake  by 
decreeing  a  reformation  of  the  instrument.  Hunt  v.  Rousman- 
ierre,  1  Peters,  1 ;  Oliver  v.  Insurance  Co.,  2  Curtis,  298,  299 ;  Trav- 
elers' Insurance  Co.  v.  Henderson,  69  Fed.  Rep.  762,  767. 

DURESS— ITS  EFFECTS  ON  CONTRACTS. 

139.  A  person  is  said  to  have  acted  under  duress  when  he  pays 
money,  delivers  property,  or  executes  an  obligation  of  any  kind, 
to  obtain  the  release  of  himself,  his  wife  or  his  child  from  any  un- 
lawful physical  restraint  imposed  by  another ;  or  when  he  executes 
an  obligation,  pays  money  or  delivers  property  to  prevent  the  un- 
lawful imprisonment  of  himself,  his  wife,  or  his  child,  such 
imprisonment  being  threatened  by  another,  with  such  a  show  of 
force  as  justifies  the  belief  that  the  threat  will  be  executed;  or 
when  he  executes  an  obligation,  or  pays  money  or  delivers  property 
to  avoid  any  serious  bodily  harm  to  himself,  his  wife  or  his  child, 
which  is  threatened  to  be  inflicted  by  another.     Promises  made 


41 

under  duress  will  not  be  enforced,  and  money  paid  or  property 
obtained  by  duress  may  be  recovered.    Ante,  Sec.  63. 

140.  DURESS  PER  MINAS  OR  THREATS.— It  wiU  be  ob- 
served, that  duress  of  one  kind  consists  of  threats  merely.  When 
duress  of  that  sort  is  pleaded  in  avoidance  of  a  promise,  it  must 
appear  that  the  threats  made  in  fact  overcame  the  promisor's  will 
power  and  led  him  to  promise  against  his  will.  According  to  the 
modern  decisions  the  threat  need  not  be  of  an  injury  to  life  or  limb, 
amounting  to  a  mayhem;  it  is  sufficient  if  serious  bodily  harm  is 
threatened  to  the  party  himself,  or  to  his  wife,  or  to  his  child.  See 
Forshay  v.  Fergusen,  5  Hill,  154;  Baker  v.  Morton,  12  Wall.  150, 
158 ;  Collins  v.  Westbury,  2  Bay,  211. 

141.  IMPRISONMENT,  WHEN  LAWFUL  AND  WHEN  UN- 
LAWFUL.— In  this  country  persons  can  only  be  lawfully  arrested 
in  the  following  manner ;  first,  by  virtue  of  a  warrant  issued  by 
some  court  or  magistrate  having  authority  to  issue  warrants; 
second,  without  a  warrant  by  an  officer  of  the  law,  such  as  a  police 
officer,  constable,  sheriff  or  marshal,  who  has  reasonable  ground  to 
believe  that  an  offense  has  been  committed,  and  that  an  immediate 
arrest  without  warrant  is  necessary  to  prevent  an  escape,  the  arrest 
being  made  in  such  a  case,  for  the  purpose  of  taking  the  accused 
before  an  examining  magistrate,  and  obtaining  a  warrant  for  his 
detention.  Hence,  it  follows  that  a  person  is  unlawfully  restrained 
of  his  liberty  unless  he  is  arrested  and  held  in  custody  in  one  or 
the  other  of  the  modes  last  stated. 

142.  ARREST  UNDER  VALID  PROCESS,  NOT  DURESS. 
If  a  person  is  arrested  for  a  debt  under  valid  judicial  process,  and 
while  so  held  enters  into  a  contract  to  secure  his  release,  he  will  not 
be  regarded  as  necessarily  acting  under  duress,  but  an  agreement 
thus  made  will  be  carefully  scrutinized.  A  bond  given  to  secure 
one's  appearance  to  answer  for  an  alleged  crime  is  not  executed 
under  duress,  though  entered  into  while  the  obligor  is  under  arrest. 
And  a  mere  threat  to  levy  an  execution  or  attachment,  or  to  bring 
a  suit  to  collect  a  debt,  is  not  such  duress  as  will  avoid  a  contract 
made  under  the  pressure  of  such  a  threat. 

143.  ARREST  UNDER  VALID  PROCESS  MAY  CONSTI- 
TUTE DURESS.— While  it  is  generally  true  that  a  contract  made 


42 

by  a  person  who  is  in  custody,  under  a  valid  warrant,  is  not  re- 
garded as  having  been  executed  under  duress  and  therefore  as 
voidable,  yet  there  are  well-defined  exceptions  to  this  rule.  For 
example:  If  a  person  is  arrested  under  a  warrant  that  was  sued 
out  maliciously  and  without  probable  cause,  and  while  so  held  he 
pays  money  or  executes  an  obligation  to  secure  his  release,  he  acts 
under  duress,  although  the  warrant  was  valid.  A  person  also  acts 
under  duress  if  he  pays  money  or  executes  an  obligation  to  secure 
his  release  from  custody,  under  a  warrant  that  was  sued  out  for 
an  adequate  cause,  but  for  an  improper  purpose,  namely,  for  the 
purpose  of  extorting  money  from  the  accused,  or  for  the  purpose 
of  compelling  him  to  settle  a  civil  debt.  Brown  v.  Pierce,  7  Wall. 
205,  215 ;  Richardson  v.  Duncan,  3  N.  H.  508 ;  Watkins  v.  Baird, 
6  Mass.  511 ;  12.  Wall  150. 

144.  MORAL  DURESS. — In  some  cases  it  is  said  that  a  threat 
to  cause  a  person's  arrest  under  a  valid  warrant  to  be  thereafter 
sued  out  for  adequate  cause  does  not  constitute  such  duress  as  will 
avoid  a  contract  that  is  executed  for  a  sufficient  consideration  under 
the  pressure  of  such  a  threat.  But  in  a  number  of  cases  it  has  been 
held  to  the  contrary,  that  a  threat  made  to  a  wife  to  cause  the 
arrest  of  her  husband  on  a  criminal  charge,  or  to  a  parent  to  cause 
the  arrest  of  his  child,  does  constitute  such  duress  as  will  serve  to 
vitiate  a  contract  if  the  threat,  in  fact,  overcomes  the  will  of  the 
person  to  whom  it  is  addressed  and  occasions  a  forced  assent,  with- 
out reference  to  the  question  whether  there  was  or  was  not  adequate 
ground  for  the  threatened  arrest.  This  has  been  termed  a  species 
of  moral  duress.  Eadie  v.  Slimmon,  26  N.  Y.  9 ;  Adams  v.  Irving 
Nat.  Bank,  116  N.  Y.  606;  Taylor  v.  Jaques,  106  Mass.,  291; 
Gregor  v.  Hyde,  10  C.  C.  A.  290,  293. 

145.  MONEY  PAID  TO  REGAIN  PROPERTY  WRONG- 
FULLY SEIZED. — When  a  person  pays  money  to  regain  posses- 
sion of  property  unlawfully  seized,  or  to  avoid  a  threatened  un- 
lawful seizure,  by  a  public  officer  who  is  authorized  to  make  seizures, 
it  may  be  recovered.  Hendy  v.  Soule,  Deady  Rep.  400.  If  a  col- 
lector of  import  duties  demands  more  than  the  lawful  duty,  and 
the  sum  demanded  is  paid  to  avoid  heavy  penalties,  so  much  as  was 
paid  in  excess  of  the  lawful  duty  may  be  recovered.  Maxwell  v. 
Griswold,  10  How.  U.  S.,  241,  256.  But  money  paid  to  get 
possession  of  goods  lawfully  seized  under  attachment,  or  paid 


43 

to  prevent  the  levy  of  an  execution  or  attachment,  is  not  recover- 
able. 

146.  CONTRACTS  MADE  UNDER  DURESS  VOIDABLE.— 
Contracts  made  under  duress  are  said  to  be  simply  voidable.  It 
would  seem  to  follow,  therefore,  that  a  negotiable  note  executed 
under  duress,  may  be  enforced  against  the  maker,  by  an  innocent 
purchaser  for  value.  But  under  certain  circumstances  it  would 
seem  that  duress  ought  to  render  a  note  void;  for  example,  if  a 
man  is  ordered  by  a  highwayman  to  sign  a  note  and  does  so  to  save 
his  life,  while  a  pistol  is  held  at  his  head  to  enforce  obedience,  such 
a  note  ought  to  be  held  void,  even  in  the  hands  of  an  innocent  pur- 
chaser for  value. 


ALTERATION  OF  CONTRACTS. 

147.  MATERIAL  ALTERATION.— An  unauthorized  altera- 
tion of  a  contract  in  a  material  respect  by  a  party  thereto,  while 
the  contract  is  executory,  renders  it  invalid  as  to  the  other  party. 
The  same  result  follows  if  a  contract  is  altered  by  a  third  party, 
with  the  sanction  of  one  of  the  parties  to  the  contract.  And  any 
alteration  of  a  contract  is  material  which  changes  its  terms  in  the 
slightest  degree.  Thus,  adding  an  interest  clause  to  a  contract 
which  does  not  bear  interest,  increasing  the  rate  of  interest,  or 
changing  the  place  or  time  of  payment,  are  each  material  altera- 
tions. 

148.  IMMATERIAL  ALTERATIONS.— In  construing  con- 
tracts, however,  the  law  will  supply  obvious  omissions  of  words  or 
phrases,  and  will  disregard  inaccuracies  of  language  where  the 
intent  is  clear.  Ante,  Sec.  88.  Hence,  alterations  which  merely 
interpolate  words  which  would  be  supplied  in  construing  the  con- 
tract, are  not  material. 

149.  ALTERED   INSTRUMENTS  VOIDABLE.— An   altered  i        / 
instrument  is  voidable,  not  void.     The  innocent  party,  notwith-  *^  r^ 
standing  the  alteration,  may  insist  on  the  performance  of  the  orig- 
inal agreement,  or  he  may  insist  on  the  execution  of  the  contract  as 
altered,  or  third,  he  may  treat  the  contract  as  no  longer  obligatory. 

150.  INTENT  OF  PARTY  NOT  MATERIAL.— A  material 
alteration  of  a  contract  by  a  party  thereto,  or  by  another  with  his 


44 

authority,  renders  the  contract  voidable,  although  there  was  no  in- 
tent to  defraud.  It  has  even  been  held  that  an  immaterial  altera- 
tion, if  it  was  made  with  intent  to  defraud,  will  invalidate  a  con- 
tract;  but  this  doctrine  cannot  be  said  to  be  fully  established. 
Kailroad  v.  Hurst,  9  Alabama,  513;  Adams  v.  Frye,  3  Metcalf, 
103. 

151.  ALTERATION  BY  A  STRANGER.— A  contract  is  not 
impaired  by  a  purely  accidental  alteration  thereof  by  a  third  party. 
This  is  the  law  both  in  the  United  States  and  England.  It  is  held, 
however,  in  England,  that  a  party  having  the  custody  of  a  contract 
is  bound  to  preserve  it  intact,  hence  in  that  country  it  has  been 
ruled  that  if  a  contract  is  intentionally  altered  by  a  stranger,  while 
so  in  the  possession  of  one  of  the  parties,  it  is  voidable  at  the 
election  of  the  other  party.  But  such  is  not  the  law  in  this  country. 
In  the  absence  of  fraud  or  negligence,  the  unauthorized  alteration 
of  a  contract  by  a  third  party  does  not  vitiate  it. 

152.  ALTERATION  BY  CUSTODIAN  WHO  IS  NOT  A 
PARTY. — It  has  also  been  held  that  the  intentional  alteration  of  a 
contract,  by  one  who  is  not  a  party  to  it,  but  who  has  its  custody, 
renders  it  voidable,  without  specific  evidence  that  he  had  authority 
from  one  of  the  parties  to  alter  it.  Pattison  v.  Luckly,  10  Law 
Rep.  Ex.  330 ;  Morrison  v.  Welty,  18  Md.  169.  This  doctrine  is  not 
well  established. 

153.  NOTE  OR  BILL  ALTERED.— If  negotiable  paper,  such 
as  a  note  or  bill,  is  altered  in  a  material  respect  by  the  holder,  it 
cannot  be  collected,  even  by  an  innocent  purchaser  for  value. 

154.  CONTRACT  ALTERED— RIGHT  TO  RECOVER  ORIG- 
INAL CONSIDERATION.— It  is  the  better  view  that  when  a  party 
has  intentionally  altered  a  written  contract,  in  a  material  respect, 
so  that  he  cannot  recover  upon  it,  he  cannot  recover  the  original 
consideration  upon  which  the  contract  was  founded.  Thus  if  a 
note  given  for  borrowed  money,  is  intentionally  altered  by  the 
holder,  he  should  not  be  allowed  to  recover  the  sum  loaned  in  an 
action  of  assumpsit. 

155.  ALTERING  DEED  AFTER  DELIVERY.— The  altera- 
tion of  a  deed,  after  the  title  has  passed  by  delivery,  does  not  in- 
validate the  instrument,  or  at  IcasL  does  not  affect  the  title. 


45 

156.  ALTERING  CONTRACTS  BY  MUTUAL  CONSENT.— 
All  contracts  may  be  altered,  as  heretofore  stated  (Sec.  56),  by 
mutual  consent  of  the  parties ;  but  such  alteration  by  consent  will 
discharge  a  surety,  unless  he  also  consents  to  the  alteration.  And 
a  contract  may  be  altered  orally  by  consent,  although  it  contains  a 
clause  that  it  shall  not  be  altered  except  in  writing.  By  such  a 
clause  the  parties  do  not  deprive  themselves  of  the  power  to  subse- 
quently agree  to  alter  it  orally.  McFadden  v.  O'Donnell,  18  Cal. 
160 ;  Ins.  Co.  v.  Earle  33  Michigan,  143. 

157.  When  the  contract  is  one  that  by  the  Statute  of  Frauds 
must  be  in  writing,  a  verbal  alteration  may  either  be  ineffectual 
to  alter  it,  or  it  may  destroy  the  contract  altogether. 

158.  ALTERING  NEGOTIABLE  PAPER  BY  ORAL  AGREE- 
MENT.— Promissory  notes  and  bills  of  exchange  must  be  in  writ- 
ing; hence  a  verbal  agreement  varying  or  altering  their  terms  is 
repugnant  thereto  and  void  if  made  at  the  time  of  the  execution 
and  delivery.    Ante,  See.  53. 


r& 


ELECTION  AND  WAIVER— RATIFICATION. 


159.  When  a  contract  is  broken  by  one  of  the  parties,  the  oppo- 
site party  frequently  has  a  choice  of  remedies,  which  is  termed  an 
election.  Some  illustrations  of  this  right  of  election  have  already 
been  given  in  the  case  of  contracts  vitiated  by  fraud  or  by  a  mate- 
rial alteration.  Ante,  Sees.  131,  149.  But  in  very  many  other 
cases  a  party  has  a  choice  of  remedies.  Thus,  if  a  party  to  a  con- 
tract refuses  to  execute  it,  the  other  party  may  sue  for  damages, 
or  elect  to  treat  the  contract  as  rescinded;  and  one  who  buys  an 
article  in  consequence  of  a  false  representation  as  to  its  quality, 
may  ordinarily  either  sue  for  damages,  or  rescind  the  bargain. 

160.  PROMISE  TO  DO  ONE  OP  TWO  OR  MORE  ACTS.— 
When  one  party  to  a  contract  promises  to  do  one  of  two  things  in 
the  alternative,  by  a  given  time,  and  he  does  neither,  the  opposite 
party  then  has  his  election  to  require  the  performance  of  either  act. 
For  example :  where  a  debtor  had  an  option  to  pay  a  debt  in  three 
ways,  by  a  given  day,  and  he  failed  to  pay  it  in  either  way — it  was 
held  that  the  opposite  party  might  claim  payment  in  either  way. 
Corbin  v.  Fairbanks,  56  Vt.  538. 


46 

161.  ELECTION,  WHEN  BINDING.— An  election  as  between 
remedies  or  rights,  when  once  made  with  full  knowledge,  of  all  the 
facts,  is  in  many  cases  Binding  on  him  who  makes  it,  and  for  that 
reason  the  right  of  election  should  be  carefully  exercised.  For 
example,  if  property  is  purchased  with  an  intent  on  the  part  of  the 
purchaser  not  to  pay  for  it,  the  sale,  as  we  have  seen,  is  voidable 
(ante,  See.  129),  and  the  vendor  may  reclaim  his  property;  but  if, 
with  knowledge  of  the  fact  that  it  was  bought  with  such  fraudulent 
intent,  the  vendor  sues  for  the  purchase  price,  he  thereby  irrevoca- 
bly elects  to  affirm  the  sale.  Ante,  Sec.  134.  In  like  manner  a 
principal  is  held  to  have  elected  to  become  bound  by  an  unauthor- 
ized contract  made  by  his  agent,  if,  after  he  has  knowledge  of  the 
contract,  he  does  any  act  that  recognizes  it  as  valid. 

162.  WAIVER. — By  a  waiver  a  party  merely  relinquishes  some 
right  which  a  contract  gives  him,  or  which  the  law  creates.  As  to 
the  waiver  of  a  statutory  defence,  and  the  necessity  for  a  considera- 
tion in  such  cases,  see  Sec.  43.  A  right  secured  by  a  contract  may 
be  waived  and  is  waived  when  the  person  in  whom  the  right  is 
vested  knowingly  does  any  act  that  is  inconsistent  with  the  asser- 
tion of  such  right.  The  adjudged  cases  furnish  many  illustrations 
of  the  doctrine  of  waiver.  A  vendor  of  goods,  who  with  know- 
ledge that  the  goods  have  not  been  delivered  to  the  buyer  and  are 
still  in  transit,  sues  the  buyer  for  the  purchase  price  and  attaches 
the  goods  as  his  property,  thereby  waives  his  right  of  stoppage 
in  transitu. 

And  generally,  when  by  the  terms  of  a  contract  a  person  is  re- 
quired to  do  a  given  act  within  a  certain  time  or  in  a  certain 
manner,  the  right  to  insist  upon  performance  within  the  prescribed 
time  or  in  the  prescribed  way,  is  waived,  if  the  opposite  party  to 
the  contract  by  any  act  or  neglect  prevents  the  party  in  default 
from  doing  that  which  he  had  contracted  to  do  within  the  time  or 
in  the  manner  contemplated.  King  Iron  Bridge  Co.  v.  City  of  St. 
Louis,  43  Fed.  Rep.  768. 

163,  RATIFICATION. — Ratification  consists  in  doing  some  act 
whereby  a  person  becomes  bound  by  an  agreement  made  in  his  name 
but  without  his  authority.  Whenever  a  person  who  knows  that  a 
contract  has  been  made  in  his  name  and  without  his  authority,  in- 
tentionally does  some  act  which  recognizes  the  contract  as  binding, 


47 

he  thereby  ratifies  the  agreement  and  becomes  bound  by  it  to  the 
same  extent  as  if  it  had  originally  been  executed  with  his  knowledge 
and  sanction. 

164.  CONTRACT  RATIFIED  VALID  FROM  INCEPTION. 
—Whenever  a  voidable  contract  is  ratified  it  becomes  valid  from 
Its  inception ;  all  acts  that  were  done  under  it  before  it  was  ratified 
become  binding  on  him  who  ratifies  it,  as  well  as  those  done  subse- 
quently. 

165.  Voidable  contracts  only  are  subject  to  ratification.  An 
utterly  void  contract  cannot  be  ratified.  And  only  those  persons 
who  have  capacity  to  make  a  contract  are  able  to  ratify  it. 

166.  THE  DOCTRINE  OF  ESTOPPEL.— In  suits  brought  to 
enforce  contracts  or  to  recover  property,  one  or  the  other  of  the 
parties  thereto  may  be  precluded  by  his  previous  statements  or 
conduct,  from  making  a  defence  or  asserting  a  claim  which  he 
otherwise  might  have  made  or  asserted.  This  is  termed  an  estoppel. 
For  example,  if  a  man  stands  by  and  sees  his  property  sold,  as  be- 
longing to  another,  without  disclosing  to  the  buyer  his  ownership 
of  the  same,  he  will  be  estopped  by  his  silence  from  asserting  his 
title  to  the  property,  either  as  against  the  buyer  or  as  against  any 
one  who  has  derived  title  from  the  buyer.  If  a  father,  by  promis- 
ing to  give  his  son  a  piece  of  land,  thereby  induces  him  to  enter  into 
possession  of  the  land  and  to  make  valuable  improvements  on  the 
same,  he  will  be  estopped  by  his  promise  from  asserting  a  title  to 
the  land  as  against  his  son,  although  the  promise  to  convey  the  land 
to  him  rested  upon  no  consideration  when  it  was  made,  and  for 
that  reason  was  not  enforceable. 

A  lessee  who  takes  a  lease  of  land  or  premises  and  enters  into 
possession  of  the  same  under  the  lease,  by  so  doing  admits  that  the 
landlord  has  a  good  title  and  is  estopped  from  disputing  his  land- 
lord's title,  so  long  as  he  remains  in  possession  under  the  lease. 
Many  other  illustrations  of  the  doctrine  of  estoppel  might  be  given, 
but  they  all  rest  upon  the  same  principle. 

167.  ESTOPPEL,  HOW  CREATED.— To  raise  an  estoppel  it 
is  necessary  to  show  that  a  person  whose  duty  it  was  at  a  given  time 
to  take  a  certain  action,  or  to  disclose  certain  facts,  failed  to  take 
such  action  or  to  make  such  disclosure,  in  consequence  whereof, 


48 

some  third  party  was  induced  to  act  in  a  manner  detrimental  to 
his  interest.  For  example,  where  a  person  was  asked  if  he  had 
any  legal  defence  to  a  note,  and  he  replied  that  he  had  not,  know- 
ing that  the  inquiry  was  made  with  a  view  of  purchasing  the  note, 
it  was  held  that  he  was  estopped  from  subsequently  making  a  de- 
fence which  he  happened  to  have,  it  appearing  that  the  note  had 
been  purchased  in  reliance  upon  the  statement  that  no  defence 
existed  against  it.    Hoover  v.  Kilander,  83  Ind.  420. 

168.  RECITALS  IN  CONTRACTS  AND  DEEDS.— When  a 
deed  or  a  contract,  or  any  other  written  obligation,  contains  recitals 
of  matters  of  fact  (as  where  a  bond  contains  a  recital  that  it  is 
secured  by  a  mortgage  on  certain  property),  one  who  signs  such 
deed,  contract  or  obligation  will  be  estopped  from  denying  the  fact 
so  recited.  This  is  termed  "an  estoppel  by  deed."  The  illustra- 
tions given  in  the  preceding  sections  are  instances  of  "estoppel 
in  pais." 


ABROGATION  OF  CONTRACT— RELEASE. 


/ 


169.  After  a  contract  has  been  executed  it  is  always  competent 
for  the  parties  to  abrogate  or  annul  it  by  mutual  consent;  mutual 
promises  made  by  the  parties  to  a  contract  to  release  one  another 
therefrom,  rest  upon  a  valuable  consideration  and  are  effectual  to 
discharge  the  contract,  although  they  are  made  orally,  and  although 
the  contract  to  be  discharged  is  under  seal.  It  must  be  borne  in 
mind,  however,  that  an  agreement  to  cancel  a  deed  for  land,  after  it 
has  been  delivered  and  recorded,  will  not  operate  to  divest  the  title 
of  the  grantee.    A  re-conveyance  is  necessary. 

170.  RELEASE. — When  one  party  to  a  contract  releases  the 
other  from  his  obligation,  the  release  must  either  be  supported  by 
a  valuable  consideration,  or  it  must  be  executed  under  seal,  which 
imports  a  consideration.    Ante,  Sees.  44,  47. 

171.  CONTRACTS,  JOINT  AND  SEVERAL— RELEASE  OF 
SAJVIE. — By  the  common  law,  when  two  or  more  persons  unite  in 
making  a  promise,  the  contract  thereby  created  (depending  upon 
the  language  employed)  is  either  a  joint  or  a  several  contract,  or 
it  is  both  joint  and  several.  If  the  contract  is  joint,  the  death  of 
one  of  the  promisors  operates  to  release  his  estate  from  all  liability, 


49 

and  to  devolve  all  the  rights  and  liabilities  created  by  the  contract 
upon  the  surviving  promisors.  But  if  the  contract  is  several,  or 
joint  and  several,  the  death  of  one  promisor  does  not  operate  to 
discharge  his  estate  or  to  deprive  it  of  any  benefits  which  may  ac- 
crue from  the  contract. 

172.  SUITS  UPON  JOINT  CONTRACTS— HOW  BROUGHT. 

— In  suing  upon  a  joint  contract,  where  the  common  law  is  not 
modified  by  statute,  it  is  necessary  to  sue  all  the  living  promisors, 
and  if  either  one  has  been  released  from  the  contract,  such  release 
of  one  operates  to  discharge  all.  In  suing  upon  a  joint  and  several 
contract,  the  plaintiff  has  an  election  to  sue  all  of  the  promisors 
together,  or  to  sue  any  one  of  them  separately.  But  it  is  a  rule  of 
the  common  law  that  in  a  suit  to  enforce  a  joint  and  several  con- 
tract, a  release  of  one  promisor  may  be  pleaded  as  a  release  of  all. 

173.  RELEASE  BY  OPERATION  OF  LAW.— But  when  one 
of  several  joint  promisors  is  released  by  operation  of  law,  as  by  a 
discharge  in  bankruptcy  or  by  the  statute  of  limitations,  it  does 
not  operate  as  a  release  of  others  jointly  bound ;  and  if  one  of  sev- 
eral joint  promisors  pleads  infancy  as  a  release  from  liability  and 
prevails,  the  other  promisors  are  not  thereby  released. 

174.  COVENANT    NOT    TO    SUE    NOT    A   RELEASE.— A 

covenant  not  to  sue  one  of  two  joint,  or  joint  and  several  promisors, 
is  not  tantamount  to  a  release,  and  hence  does  not  discharge  a  co- 
promisor.  A  creditor  may  in  effect  release  one  joint  promisor  by 
reserving  to  himself  the  right  to  sue  him  along  with  the  other  joint 
promisors,  and  at  the  same  time  covenanting  not  to  levy  an  execu- 
tion upon  his  property.  This  amounts  to  a  mere  covenant  not  to 
sue,  and  does  not  discharge  the  other  joint  promisors. 

175.  CONTRACT  MERGED  IN  JUDGMENT.— By  the  com- 
mon law,  if  a  judgment  is  obtained  against  one  of  two  or  more 
joint  promisors,  there  can  be  no  judgment  against  the  others,  for 
the  reason  that  the  contract  becomes  merged  in  the  judgment. 

But,  if  the  judgment  is  founded  upon  a  "joint  and  several"  con- 
tract, and  the  judgment  is  against  one  party  only,  it  is  no  bar  to  a 
suit  against  the  others,  unless  the  judgment  has  been  paid. 

176.  PAYMENT.— The  payment  of  a  debt  by  any  one  of  sev- 
eral joint  or  several  promisors  operates  to  extinguish  the  debt,  and 


50 

such  payment  may  be  pleaded  by  either  of  the  promisors  in  defence 
to  a  suit. 

177.  MODERN  RULE. — Very  much  of  the  law  relative  to  joint 
and  several  contracts  has  been  rendered  obsolete  by  statutes  enacted 
in  many  states  which  declare ,  in  substance,  that  all  contracts, 
which,  by  the  common  law,  were  joint  only,  shall  be  construed  as 
joint  and  several.  R.  S.  of  Mo.,  1919,  Sec.  2155.  Statutes  have 
also  been  enacted  in  many  states  permitting  a  creditor  to  compound 
a  debt  with  one  or  more  of  several  joint  or  several  debtors,  and 
release  them  for  such  sum  as  is  deemed  proper,  without  impairing 
the  creditor's  right  of  action  against  others,  for  the  residue  of  the 
debt.    R.  S.  of  Mo.,  1919,  Sec.  2163. 

178.  ALL  JOINT  PROMISEES  MUST  JOIN  AS  PLAINT- 
IFFS.— It  is  still  necessary  that  all  promisees  should  be  parties  to 
a  suit  brought  against  the  promisor  to  enforce  the  promise.  But 
those  who  will  not  join  as  plaintiffs  may  be  made  defendants. 
R.  S.  of  Mo.,  1919,  Sec.  1159. 


13, 


INFANTS— INCAPACITY  TO  MAKE  CONTRACTS. 


179.  At  common  law,  all  persons,  both  male  and  female,  under 
21  years  of  age,  were  regarded  as  infants,  but  by  virtue  of  statutes 
that  have  been  enacted  in  some  states,  females  attain  their  ma- 
jority at  the  age  of  18.  See  Laws  of  1921,  pp.  117  and  399,  amend- 
ing R.  S.  of  Mo.,  1919,  Sees.  506  and  370.  An  infant's  contracts 
are  not  enforceable  against  the  infant,  because  an  infant  is  want- 
ing in  contractual  capacity. 

180.  OBLIGATIONS  OF  INFANTS  THAT  MAY  BE  EN- 
FORCED.— Although  an  infant's  contracts  are  generally  invalid, 
nevertheless  some  liabilities  will  be  enforced  against  an  infant. 

For  example:  An  infant  will  be  compelled  to  pay  the  reason- 
able value  of  necessaries  that  have  been  supplied  to  him  at  his  re- 
quest, or  that  have  been  supplied  to  his  wife  and  family  if  he  is 
married. 

He  will  also  be  compelled,  when  married,  to  pay  the  valid  ante- 
nuptial debts  of  his  wife,  and  to  discharge  any  other  liabilities 
which  the  law  imposes  on  him,  or  has  specially  authorized  him  to 
incur.  Thus,  where  a  surety  for  a  minor  in  a  criminal  recognizance 
has  been  compelled  to  discharge  the  recognizance,  the  amount  so 


51 

paid  by  the  surety  may  be  recovered  from  the  minor.  Bishop  on 
Contracts,  Sec.  907;  Lawson  on  Contracts  (1st  Ed.),  Sec.  133; 
Williston  on  Contracts,  Sees.  228,  240.  Contracts  of  enlistment 
bind  infant  when  authorized  by  law.  And  an  infant  cannot  avoid 
a  deed  which  the  law  would  have  compelled  him  to  make,  as  where 
a  son  holding  land  in  trust  for  his  father,  by  the  latter 's  direction 
sold  it  to  a  third  party.  In  this  case  the  son  was  not  allowed  to 
avoid  the  deed.    10  Ala.,  348. 

181.  INFANT  LIABLE  FOR  TORTS  AND  FRAUDS.— An 
infant  is  liable,  like  an  adult,  for  his  torts  and  frauds  that  do  not 
grow  out  of  and  are  not  immediately  connected  with  a  contract 
which  he  may  have  made.  Thus,  an  infant  is  liable  for  an  assault 
and  battery,  or  for  wilfully  or  negligently  injuring  the  person  or 
property  of  another.  But  when  the  tort  or  fraud  complained  of 
grows  out  of  a  contract  which  was  made  by  the  infant,  he  cannot  be 
held  responsible  for  the  tort.  For  example,  an  infant  cannot  be 
held  liable  for  false  representations  which  he  may  have  made  in 
connection  with  the  sale  of  property,  as  to  its  quality  or  title,  nor 
for  false  representations  as  to  his  age,  which  were  made  to  induce 
another  to  enter  into  a  contract  with  him.  Lawson  on  Contracts, 
Sec.  155 ;  Williston  on  Contracts,  Sec.  245. 

182.  FATHER'S  LIABILITY  FOR  AN  INFANT'S  TORTS. 
— When  an  infant  lives  with  his  father  and  is  supported  by  him, 
the  law  regards  the  infant  as  a  servant  of  the  father,  and  the 
father,  as  well  as  the  infant,  is  liable  for  the  torts  and  negligent 
acts  committed  by  the  infant  in  the  course  of  his  employment  as 
such  servant. 

183.  NECESSARIES— WHAT  THEY  ARE.— If  an  infant  is 
already  supplied,  no  matter  from  what  source,  with  what  is  reason- 
ably necessary  for  his  personal  comfort  and  well-being,  considering 
his  station  in  life,  or  if  he  is  living  with  and  is  supported  and 
clothed  by  his  parents,  then  nothing  which  may  be  furnished  to 
him  at  his  request  is  regarded  as  a  necessary.  A  person  trusting 
an  infant  under  such  circumstances,  does  so  at  his  peril.  But  when 
an  infant  is  not  living  with  and  is  not  supported  by  his  parents, 
then  all  articles  that  are  suitable  and  proper  for  the  infant,  con- 
sidering his  station  in  life,  and  his  fortune,  may  be  supplied  to  him 
and  will  be  regarded  as  necessaries,  provided  the  infant  is  not 
already  supplied  therewith.    Thus,  suitable  food,  clothing,  lodging 


52 

and  medical  attendance,  and  the  services  of  a  lawyer  when  an  in- 
fant has  been  accused  of  crime,  are  regarded  as  necessaries.  And 
articles  not  absolutely  essential  to  the  infant's  comfort  will  be  re- 
garded as  necessaries,  if  persons  of  the  infant's  age,  means  and 
station  in  life  are  usually  provided  with  them. 

184.  MONEY  NOT  USUALLY  REGARDED  AS  A  NECES- 
SARY.— An  infant  is  not  liable  at  law  for  money  borrowed  to  pay 
for  necessaries,  but  he  is  liable  for  money  directly  applied  by  the 
lender  in  procuring  necessaries  for  him.  Swift  v.  Bennett,  10 
Cush.  436 ;  Randall  v.  Sweet,  1  Denio,  460.  The  reason  of  this  dis- 
tinction is  said  to  be  that  if  money  is  loaned  directly  to  an  infant, 
lie  is  liable  to  squander  it  instead  of  providing  himself  with 
necessaries.  In  a  court  of  equity,  an  infant,  it  seems,  may  be  held 
liable  for  money  borrowed,  which  he  actually  applies  in  payment 
for  necessaries.  Lawson  on  Contracts,  Sec.  138,  and  cases  there 
cited.    Williston  on  Contracts,  Sec.  243. 

185.  ARTICLES  FURNISHED  TO  A  MINOR  TO  ENABLE 
HIM  TO  CARRY  ON  BUSINESS,  OR  FOR  ORNAMENT,  OR 
FOR  MERE  PLEASURE,  NOT  NECESSARIES.— If  a  minor 
engages  in  business  of  any  kind,  articles  furnished  to  him  to  carry 
on  that  business,  or  to  be  used  in  repairing  or  improving  his 
property,  and  money  loaned  to  him  to  enable  him  to  pay  off  en- 
cumbrances upon  his  property,  or  to  insure  it,  are  not  regarded  as 
necessaries.  Jewelry  supplied  to  a  minor,  merely  for  the  purpose 
of  personal  adornment,  and  other  articles  supplied  to  him  merely 
for  the  purpose  of  gratifying  his  taste  or  adding  to  his  pleasure, 
are  not  necessaries.  Lawson  on  Contracts,  Sec.  137;  Williston  on 
Contracts,  Sec.  242. 

186.  PERSONS  GIVING  CREDIT  TO  MINORS  DO  SO  AT 
THEIR  PERIL. — The  burden  always  rests  upon  a  person  who 
seeks  to  charge  an  infant  with  a  liability  for  goods  supplied  to  him, 
of  showing  that  the  articles  supplied  were,  in  fact,  necessaries.  If 
the  plea  of  infancy  is  interposed  and  the  fact  of  infancy  is  estab- 
lished, the  creditor  cannot  recover  against  the  infant,  unless  he 
shows  to  the  satisfaction  of  the  court  that  the  articles  supplied 
belonged  to  the  class  of  necessaries.  Before  trusting  an  infant, 
therefore,  for  goods  of  any  kind,  a  tradesman  or  other  person  must 
ascertain  at  his  peril  that  the  articles  supplied  are  necessary  for 
the  infant's  comfort  and  welfare,  and  that  he  is  not  at  the  time  in 


53 

possession  of  the  same,  nor  living  with  persons  whose  duty  it  is  to 
supply  them.  Moreover,  as  a  parent  is  not  under  any  legal  obliga- 
tion to  pay  debts  that  have  been  contracted  by  his  child,  a  parent 
cannot  be  held  responsible  for  necessaries  furnished  to  the  child. 
Kelly  V.  Davis,  49  N.  H.  176 ;  In  re  Ryder,  11  Paige,  185 ;  Lawson 
on  Contracts  (1st  Ed.),  Sec.  129;  Williston  on  Contracts,  Sees.. 
240,  242.  An  infant  is  not  estopped  at  law  from  pleading  infancy,, 
even  though  he  falsely  represented  his  age.  But  the  rule  is  dif- 
ferent in  equity.    Lawson  on  Contracts  (1st  Ed.),  Sec.  131. 

187.  LIABILITY  OF  INFANT  ON  NOTES,  BONDS,  ETC., 
GIVEN  FOR  NECESSARIES.— The  better  view  is  that  a  minor 
may  be  held  bound  on  any  special  contract  which  was  executed  for 
necessaries,  such  as  a  note,  bill  or  bond,  provided  the  obligation 
is  of  such  character  that  the  consideration  can  be  inquired  into. 
If  by  the  local  law  the  consideration  of  the  contract  executed  by 
the  minor  cannot  be  inquired  into,  because  it  is  under  seal,  or  for 
any  other  reason,  then  the  infant  should  not  be  held  bound  by  such 
special  agreement,  as  it  would  deprive  him  of  his  privilege  of  show- 
ing that  he  had  agreed  to  pay  more  than  the  reasonable  value 
thereof.    Lawson  140 ;  Williston  on  Contracts,  Sec.  240,  note  11. 

188.  CONTRACTS    OF    AN    INFANT    VOIDABLE,     NOT 

VOID. — It  was  once  thought,  and  there  are  some  decisions  to  that 
effect,  that  a  power  of  attorney  executed  by  a  minor,  his  contracts 
of  suretyship  and  guaranty,  and  all  other  contracts  that  are  mani- 
festly to  his  disadvantage,  are  void  and  not  capable  of  ratification. 
But  it  is  the  better  and  more  modem  view  that  an  infant's  con- 
tracts, of  whatsoever  nature,  are  simply  voidable  at  his  election, 
and  subject  to  ratification  by  the  minor  when  he  attains  his  ma- 
jority. Lawson  on  Contracts,  130.  and  eases  collected  in  the 
notes  thereto.    Williston  on  Contracts,  Sec.  226. 

189.  VOIDABLE  CONTRACTS  OF  INFANT— HOW  RATI- 
FIED.—A  minor  after  becoming  of  full  age,  may  ratify  his  void- 
able contract  made  during  infancy,  in  the  following  ways :  First, 
by  expressly  agreeing  to  execute  such  contract ;  Second,  by  acts  and 
conduct  from  which  an  agreement  or  an  intention  to  execute  it 
will  be  implied ;  Third,  by  failing  to  disaffirm  in  a  reasonable  time. 

190.  NEW  PROMISES— CONSIDERATION  THEREOF.— 
An  express  promise  made  by  an  infant  after  attaining  his  ma- 


54 

jority,  to  execute  a  voidable  contract  made  during  his  minority, 
does  not  require  a  new  consideration  to  support  it,  but  such  a 
promise,  to  operate  as  a  ratification,  must  be  made  by  the  infant 
with  full  knowledge  that  he  is  not  liable  thereon.  Such  promise 
must  also  be  made  to  the  opposite  party  to  the  contract,  or  to  his 
agent,  and  must  be  couched  in  such  language  as  shows  an  intention 
on  the  part  of  the  minor  to  execute  the  voidable  agreement.  The 
new  promise,  however,  need  not  be  in  writing,  unless  a  statute  of 
the  state  where  it  is  made  so  requires.  Such  a  statute  has  been 
enacted  in  Missouri  (R.  S.  of  Mo.,  1919,  See.  2173)  and  in  some 
other  states. 

191.  ACTS  OF  INFANT  AMOUNTING  TO  A  RATIFICA- 
TION.— If  a  person  accepts  rent  after  becoming  of  full  age,  under 
a  lease  which  was  executed  by  him  during  his  minority,  or  if,  hav- 
ing bought  goods  on  credit,  after  he  attains  his  majority,  he  retains 
and  uses  them,  or  if,  having  sold  property  during  his  minority, 
after  becoming  of  full  age  he  receives  and  retains  the  purchase 
money,  or  if,  after  attaining  his  majority,  he  brings  an  action  to 
enforce  a  contract  that  was  made  by  him  during  his  minority,  in 
each  of  these  cases,  his  conduct  amounts  to  a  ratification.  So  if, 
having  purchased  property  during  his  minority,  a  minor  retains 
possession  of  it  for  an  unreasonable  length  of  time  after  attaining 
his  majority,  or  sells  or  disposes  of  the  property  to  a  third  party 
— such  acts  amount  to  a  ratification  of  the  purchase,  and  render 
him  liable  for  the  purchase  money. 

192.  EFFECT  OF  RATIFICATION.— The  ratification  of  a 
voidable  contract  by  a  minor  on  attaining  his  majority,  renders 
the  contract  valid  from  its  inception,  and  it  cannot  thereafter  be 
disaffirmed. 

193.  DISAFFIRMANCE  OF  A  CONTRACT  BY  AN  IN- 
FANT.— A  minor  has  the  right,  both  during  his  minority  and 
afterwards,  to  disaffirm  his  voidable  contracts.  This  right  extends 
to  the  disaffirmance  of  most  of  his  executed  contracts,  as  well  as  to 
the  disaffirmance  of  those  that  are  executory.  The  right  to  disaf- 
firm, however,  must  be  exercised  more  promptly  in  certain  cases 
than  in  others,  depending  upon  the  nature  of  the  contract.  Thus, 
if  a  contract  with  a  minor  is  wholly  executory,  it  is  not  binding 
upon  him  until  he  has  expressly  ratified  it  after  becoming  of  age, 


55 

and  until  thus  ratified  he  may  plead  infancy  as  a  defence,  without 
reference  to  lapse  of  time,  and  such  a  plea  is  itself  a  disaffirmance. 
And  where  a  minor  during  his  minority  has  executed  a  note,  bond 
or  bill  for  borrowed  money,  he  may  usually  plead  infancy  as  a 
defence  to  a  suit  brought  to  collect  it,  at  any  time  after  he  becomes 
of  age,  if  in  the  meantime  he  has  not  expressly  ratified  the  obliga- 
tion!' An  infant  cannot  disaffirm  a  conveyance  of  real  estate  until 
he  attains  his  majority,  but  may,  during  his  infancy,  enter  into 
possession  thereof  and  enjoy  the  rents  and  profits.  After  having 
attained  his  majority  and  disaffirmed  his  conveyance,  he  may  sue 
for  and  recover  his  property  from  a  third  party  to  whom  it  has 
been  theretofore  conveyed.  Lawson  on  Contracts  (1st  Ed.),  Sees. 
147,  148 ;  Williston  on  Contracts,  Sec.  235. 

But  in  other  cases,  for  example,  where  an  infant  has  purchased 
personal  property  during  his  minority,  and  has  retained  posses- 
sion of  it  and  has  treated  it  as  his  own  for  an  unreasonable  length 
of  time  after  becoming  of  full  age,  such  acts,  as  heretofore  stated, 
amount  to  an  implied  ratification  (ante,  Sec.  191),  and  he  cannot 
thereafter  disaffirm  the  purchase.  So,  if  a  minor  sells  and  conveys 
his  land  to  another,  he  must  disaffirm  the  conveyance  within  a  rea- 
sonable time  after  becoming  of  full  age,  otherwise  the  right  to  dis- 
affirm will  be  lost.  Usually  he  may  disaffirm  his  conveyance  of  real 
estate  at  any  time  before  his  right  to  recover  the  property  is  barred 
by  the  statute  of  limitations. 

194.  EXECUTED  CONTRACTS  THAT  CANNOT  BE  DIS- 
AFFIRMED.—There  are  some  executed  contracts  of  an  infant, 
which,  as  it  seems,  cannot  be  disaffirmed.  For  example,  if  an  infant 
goes  shopping  and  buys  goods  of  a  tradesman,  such  as  are  usually 
bought  on  such  excursions,  paying  therefor  no  more  than  their 
reasonable  value,  he  will  not  be  permitted  to  recover  the-  money 
paid  on  offering  to  return  the  goods.  Wilson  v.  Kearse,  Peake  Add. 
Cas.,  196.  It  has  also  been  held  that  if  an  infant  entrusts  money 
belonging  to  him  to  a  third  person,  with  directions  to  such  person 
to  use  the  money  if  necessary  in  support  of  his  (the  infant's) 
parents,  and  it  is  so  used,  the  infant  cannot  recover  the  money  upon 
his  becoming  of  full  age.  Welch  v.  Welch,  103  Mass.  562.  It  has 
also  been  held  that  if  an  infant  becomes  a  partner  with  another 
and  puts  money  into  the  firm  business,  and  does  work  for  the  part- 
nership, he   cannot   afterwards    disaffirm   the   partnership    agree- 


56 

ment  and  recover  of  his  partner  the  money  invested  in  the  firm 
business,  nor  the  value  of  services  rendered  for  the  firm.  Page  v. 
Morse,  128  Mass.  99. 

195.  DISAFFIRMANCE— ITS  EFFECT.— The  disaffirmance 
of  a  contract  by  a  minor  renders  it  void  as  to  both  parties  from  its 
inception.  Therefore,  on  disaffirming  a  contract,  the  title  to  prop- 
erty which  the  minor  may  have  parted  with  in  execution  of  the 
same  becomes  revested  in  the  minor,  and  he  may  reclaim  it  from  the 
opposite  party,  or  from  the  vendee  of  the  opposite  party. 

Money  which  the  minor  may  have  given  in  exchange  for  prop- 
erty, may  also  be  reclaimed  by  him  when  the  contract  has  been 
disaffirmed,  provided  the  property  which  was  received  by  the 
minor  is  restored  to  the  vendor,  or  has  been  taken  from  the  minor 
by  a  third  party.  McCarthy  v.  Henderson,  138  Mass.  310 ;  Whit- 
comb  V.  Joslyn,  51  Vt.  79. 

196.  DUTY  OF  A  MINOR  ON  DISAFFIRMANCE.— When 

a  minor  disaffirms  his  contract,  it  is  his  duty  to  restore  to  the 
opposite  party  all  that  he  has  received  on  the  contract,  either  in 
the  form  of  money  or  property,  if  it  is  within  his  power  to  do  so. 
But  if  during  his  minority  the  infant  has  wasted  or  squandered 
the  money  or  property  received  by  him  from  the  opposite  party, 
and  he  is  for  that  reason  unable  to  restore  it,  he  may,  nevertheless, 
reclaim  what  he  has  parted  with.  In  other  words,  an  infant's 
right  to  disaffirm  his  voidable  contract  (unless  the  case  is  very  ex- 
ceptional) does  not  depend  upon  his  ability  to  make  restitution 
of  that  which  he  has  received.  Lawson  on  Contracts,  Sec.  153, 
and  eases  cited ;  Williston  on  Contracts,  Sec.  238. 

196a.  Plea  of  infancy,  a  personal  privilege  of  the  minor. — 
The  infant  alone  has  the  right  to  plead  infancy  as  a  defence  to 
a  suit  upon  a  contract.  An  adult  is  not  entitled  to  take  advantage 
of  the  fact  that  the  opposite  party  to  a  contract  is  an  infant,  and 
on  that  ground  avoid  it.  He  must  execute  the  agreement  if  the 
infant  insists  upon  the  performance. 


M) 


CONTRACTS  OF  MARRIED  WOMEN. 


197.  CONTRACTS  OF  MARRIED  WOMEN  VOID.— A 
married  woman's  contract,  unlike  that  of  an  infant,  is  utterly 
void  wherever  the  common  law  prevails,  and  has  not  been  modi- 


57 

fied  by  statute.  At  common  law  the  husband  by  virtue  of  mar- 
iage  became  the  absolute  owner  of  all  the  wife's  personal 
property;  also  the  owner  of  her  choses  in  action  when  reduced 
to  possession,  and  the  owner  of  a  life  estate  in  her  lands.  But 
the  husband  at  the  same  time  became  bound  for  all  the  ante- 
nuptial debts  of  his  wife,  if  reduced  to  judgment  in  his  lifetime, 
and  for  her  ante-nuptial  and  post-nuptial  torts.  He  also  became 
bound  to  support  his  wife ;  but  the  same  liability  does  not  rest 
on  the  wife  to  support  the  husband. 

198.  Statutes  have  now  been  enacted  in  many,  if  not  all,  of 
the  states  of  this  Union,  which  enable  women  to  make  contracts 
of  a  certain  character,  and  which  materially  modify  the  effect  of 
marriage  at  common  law.  Rev.  Stat,  of  Mo.,  1919,  Chap.  64. 
As  the  capacity  of  a  married  woman  to  make  a  contract  is  at  the 
present  time  largely  a  matter  of  local  law,  no  attempt  will  be 
made  to  further  define  it.  It  may  be  said,  however,  that  even  at 
common  law  when  a  married  woman  was  possessed  of  a  separate 
estate  (that  is,  of  an  estate  vested  in  trustees  for  her  sole  and 
separate  use),  she  might  to  some  extent  charge  such  estate  in  the 
trustee 's  hands  by  her  contracts.  But  such  contracts  could  only 
be  enforced  in  a  court  of  equity. 

\L^c^   INSANE  PERSONS. 

199.  INSANE  PERSON'S  PROMISE  NOT  BINDING.— A 
promise  made  by  an  insane  person  will  not  be  enforced.  But  this 
rule  is  subject  to  the  exception,  that  an  insane  person  may  be  com- 
pelled to  pay  for  necessaries  furnished  to  himself,  or  to  his  wife 
or  family.  The  law  creates  a  promise  to  pay  for  necessaries  thus 
furnished.    Ante,  Sec.  58. 

200.  INSANITY— WHAT  IT  IS.— A  person  is  said  to  be  in- 
sane in  a  legal  sense,  and  his  promise  is  not  enforceable,  if  he 
does  not  possess  sufficient  mental  capacity  "to  understand  the 
subject-matter  of  the  contract  he  is  about  to  make,  its  nature 
and  probable  consequences."  It  makes  no  difference  what  the 
cause  of  such  mental  incapacity  may  be,  whether  it  is  imbecility 
superinduced  by  old  age,  or  long  continued  drunkenness,  or  mono- 
mania, or  actual  lunacy.  The  effect  of  either  form  of  insanity 
is  to  render  a  contract  voidable. 


58 

201.  LUCID  INTERVALS.— PARTIALLY  SANE.— An  insane 
person  who  has  lucid  intervals  may  make  a  valid  contract  during 
such  intervals.  Furthermore,  a  person  may  have  hallucinations 
on  given  subjects,  but  be  sane  on  other  subjects.  In  the  latter 
ease  a  contract  pertaining  to  matters  to  which  his  hallucinations 
do  not  extend  is  valid. 

202.  CONTRACTS  OF  AN  INSANE  PERSON,  EXECUTORY 
AND  EXECUTED. — The  following  propositions  seem  to  be  sup- 
ported by  the  most  recent  decisions :  1st.  That  the  contract  of  an 
insane  person,  so  long  as  it  remains  wholly  executory  will  not  be 
enforced.  2nd.  That  the  courts  will  not  disturb  a  contract  with 
an  insane  person  that  has  been  fully  executed,  if  the  contract 
was  fair  and  honest,  and  was  entered  into  without  any  knowledge 
or  suspicion  of  the  person's  incapacity — ^unless  both  parties  can 
be  placed  in  statu  quo.  But  if  both  persons  can  unquestionably 
be  placed  in  statu  quo,  most  courts  (in  this  country)  will  lend 
their  aid  in  setting  the  contract  aside.  3rd.  That  when  a  contract 
is  fair  and  honest,  and  was  entered  into  without  knowledge  or 
suspicion  of  the  party's  insanity,  and  has  been  executed  on  one 
side,  the  courts  will  refuse  to  set  it  aside  at  the  instance  of  the 
insane  person  or  his  guardian,  unless  the  latter  restores  all  that 
has  been  received  thereunder.  Moulton  vs.  Camroux,  2  Exch. 
487;  Wilder  vs.  Weakley,  34  Ind.  181;  Mutual  Life  Ins.  Co.  vs. 
Hunt,  79  N.  Y.  541 ;  Ashcraft  vs.  DeArmond,  44  la.  229 ;  Riggins 
vs.  Green,  80  N.  C.  236;  Crawford  vs.  Scovell,  13  Norris,  Pa.  48; 
Bevin  vs.  Powell,  11  Mo.  App.  216. 

203.  CONTRACT— WHEN  ANNULLED.— It  follows  as  a 
corollary  from  the  propositions  stated  in  the  preceding  section, 
that  when  a  contract  is  made  by  a  person  who  either  knows  or 
has  reason  to  suspect  that  the  person  with  whom  he  is  dealing  is 
insane,  such  contract,  although  executed,  will  be  annulled,  and 
the  party  so  dealing  with  the  insane  person  will  be  compelled  to 
restore  what  he  has  received,  although  the  insane  party  may  not 
be  able  to  restore  all  that  he  may  have  obtained  under  the  contract 
The  same  result  follows  when  a  contract  made  with  an  insane 
person  is  not  fair  and  honest.  In  some  states  it  appears  to  be  held 
that  an  executed  contract  will  be  set  aside  at  the  instance  of  an 
insane  person,  even  though  his  mental  condition  was  not  known 
or  suspected  when  the  contract  was  made,  and  even  though  the 


59 


bargain  was  fair  and  honest,  and  even  though  the  parties  can- 
not be  placed  in  statu  quo.  Seaver  vs.  Phelps,  11  Pick.  304; 
Hovey  vs.  Hobson,  53  Maine,  451,  453;  Rogers  vs.  Blackwell,  49 
Mich.  192;  Edwards  vs.  Davenport,  20  Fed.  Rep.  756.  But  this 
is  not  believed  to  be  a  sound  doctrine. 

204.  CONTRACT  OF  INSANE  PERSON  VOIDABLE.— Con- 
tracts made  by  a  person  lacking  in  mental  capacity  are  voidable, 
not  void.  Such  contracts  may  be  ratified  or  disaffirmed  during 
a  lucid  interval  by  the  insane  person,  or  by  his  guardian.  Al- 
though such  contracts  are  simply  voidable,  the  better  view  is 
that  when  an  insane  person  conveys  property  to  a  grantee  under 
circumstances  entitling  the  former  to  disaffirm,  he  may  also  re- 
cover it  from  an  innocent  third  party  to  whom  his  grantee  has 
conveyed  it  for  value.  In  this  respect  the  rule  differs  from  that 
which  obtains  in  case  of  a  purchase  made  in  good  faith  from  a 
fraudulent  vendee.     Ante,  Sec.  130. 

205.  DRUNKENNESS.— If  a  person  enters  into  a  contract 
when  he  is  to  such  an  extent  under  the  influence  of  liquor  as  to  be 
unable  to  understand  the  subject  of  the  contract,  its  nature  or 
probable  consequence,  the  contract  is  voidable  at  the  election  of 
the  drunkard.  Such  a  contract  is  subject  to  the  same  rules  which 
apply  to  contracts  of  insane  persons. 


CORPORATIONS. 

206.  POWEROF  CORPORATION— WHENCE  DERIVED.— 

A  corporation  derives  all  of  its  power  to  make  contracts  from 
the  statute  or  act  under  which  it  was  incorporated.  Hence,  it 
can  only  make  such  contracts  as  the  act  of  incorporation  author- 
izes it  to  make.  All  of  its  contracts  that  are  not  so  authorized 
are  ultra  vires  and  voidable. 

207.  IMPLIED  POWERS.— But  a  contract  made  by  a  cor- 
poration is  not  necessarily  void  or  voidable,  because  the  power 
to  make  the  particular  agreement  has  not  been  expressly  con- 
ferred by  its  charter.  Very  frequently  its  power  to  make  a 
given  contract  is  implied  from  the  nature  of  the  business  which 
it  is  authorized  to  transact,  or  from  other  powers  that  have  been 
expressly  granted.  For  example,  if  the  nature  of  its  business 
renders  it  proper  that  a  corporation  should  have  a  building  for 


60 

the  transaction  of  its  business,  or  a  manufacturing  plant,  a  power 
to  purchase  and  hold  such  real  estate  as  may  be  necessary  to  erect 
a  building  or  a  factory  will  be  implied.  So  if  a  business  corpor- 
ation is  authorized  to  borrow  money  it  will  be  inferred  that  it 
has  power  to  execute  a  promissory  note  or  a  mortgage  for  a  sum 
of  money  that  may  have  been  loaned  to  it. 

208.  IMPLIED  POWERS— GENERAL  RULE.— Generally  a 
corporation  has  the  implied  power  to  make  any  contract  which 
an  individual  may  lawfully  make,  if  the  contract  relates  to  a  sub- 
ject which  is  within  the  sphere  of  its  operations.  That  is  to  say, 
so  long  as  a  corporation  confines  itself  to  the  business  which  its 
charter  authorizes  it  to  transact,  it  may  make  any  contract  that 
an  individual  could  make,  which  is  conducive  to  the  successful 
prosecution  of  that  business. 

209.  CONTRACT  ULTRA  VIRES.— But  when  a  contract  is 
not  within  the  express  or  implied  powers  of  a  corporation,  it  is 
termed  ultra  vires,  and  such  contracts  are  voidable.  Cent 
Transpt.  Co.  vs.  Pullman  Car.  Co.,  139  U.  S.  24,  38,  48. 

210.  CONTRACT  OF  CORPORATION— HOW  EXECUTED. 

The  English  courts  concede  that  a  corporation  engaged  in  trade 

may  make  and  accept  commercial  paper  without  the  use  of  its 
corporate  seal;  also  that  contracts  which  are  entered  into  with 
great  frequency,  or  that  are  not  important,  need  not  be  executed 
under  the  corporate  seal.  But  with  respect  to  contracts  other  than 
these,  they  appear  to  hold  that  the  use  of  the  corporate  seal  is 
necessary  to  render  them  binding.  Church  vs.  Imp.  Gas  Light  Co., 
6  A.  &  E.  846,  861;  Ludlow  vs.  Charlton,  6  M  &  W.  815,  822; 
Leak  Con.  588.  The  American  doctrine  is,  that  any  contract 
which  an  individual  can  make  without  a  seal,  a  corporation  can 
likewise  make  without  a  seal,  unless  its  charter  otherwise  di- 
rects. Blunt  vs.  Walker,  11  Wis.  334 ;  Bank  of  Columbia  vs.  Pat- 
terson's Adm.,  7  Cranch.  299,  306;  Railway  Cos.  vs.  Keo.  Bridge 
Co.,  131  U.  S.  371,  381 ;  Banking  Co.  vs.  Knaup,  55  Mo.  154. 

211.  CONTRACTS— ORAL  AND  IMPLIED.— A  corporation 
can  also  enter  into  contracts  through  its  officers  and  agents,  when 
duly  authorized,  either  in  writing  or  orally,  the  same  as  an  in- 
dividual ;  and  a  contract  will  be  implied  on  the  part  of  a  corpor- 
ation under  the  same  circumstances  that  it  would  be  implied  on 


61 


the  part  of  an  individual,  when  the  contract  is  within  the  scope 
of  its  corporate  powers. 

212     FORM  OF  EXECUTION  DIRECTED  BY  CHARTER.- 

But  when  the  charter  of  a  corporation  for  any  reason  directs  that 
a  particular  contract  shall  be  executed  in  a  particular  way  as 
by  the  use  of  its  corporate  seal,  or  by  the  signature  of  certain 
officers,  it  must  be  executed  in  the  mode  pointed  out  by  its  charter 
to  rendei^A  obligatory.    Bissell  vs.  Spring  Valley,  110  U.  S.  lb^. 


AGENTS— CONTRACTS  BY. 

913     MINORS  AND  MARRIED  WOMEN  AS  AGENTS.-All 

persons,  except  the  insane,  are  competent  to  act  as  agents  for 
others  Thus,  a  minor  or  a  married  woman  may  act  as  agent  tor 
another  and  bind  him  by  their  acts,  although  they  lack  the  capa- 
city to  bind  themselves.  A  contract  made  by  a  person  through 
the  intervention  of  an  agent,  who  is  duly  authorized  to  make 
the  same,  is  as  binding  upon  the  party  as  if  made  by  himself. 
But  a  person  cannot  appoint  an  agent  to  do  a  personal  act,  such, 
for  instance,  as  making  the  contract  of  marriage,  or  a  will.  Law- 
son  on  Contracts,  (1st  Ed.)  Sec.  167;  Williston  on  Contracts,  Sees. 
247,  270,  274,  note  1. 

214.  DUTY  TO  ASCERTAIN  AGENT'S  AUTHORITY.— It  is 
a  general  rule  that  one  who  deals  with  an  agent,  for  the  first  time, 
is  bound  before  dealing  with  him  to  ascertain  the  extent  of  his 
authority.  If  one  who  has  had  no  previous  dealings  with  an  agent 
enters  into  a  contract  with  him  merely  on  his  oral  representation 
that  he  has  power  to  do  a  certain  act  or  make  a  certain  con- 
tract, and  it  transpires  that  the  representation  was  untrue,  the 
principal  will  not  be  bound. 

215.  AGENCY  CREATED  BY  WRITTEN  INSTRUMENT.— 
When  an  agency  is  created  by  a  written  instrument  which  defines 
the  agent's  authority,  the  extent  of  the  agents  power,  in  contro- 
versies between  the  principal  and  persons  who  are  acquainted 
with  such  instrument,  must  be  determined  thereby. 

216.  EXPRESS  AND  IMPLIED  POWERS  OF  AGENT.— 
From  an  express  authority  conferred  upon  an  agent  to  do  a 
given  act,  or  to  conduct  a  certain  business  or  transaction,  the 


62 

law  frequently  implies  other  powers.  Thus  from  a  direction  given 
by  a  principal  to  his  agent  to  get  immediate  possession  of  a 
building,  the  law  would  undoubtedly  imply  an  authority  on  the 
part  of  the  agent  to  promise  to  pay  a  bonus  to  induce  an  occupant 
of  the  building  to  remove,  if  possession  could  not  otherwise  be 
immediately  obtained.  An  authority  given  to  carry  on  a  certain 
business  for  the  principal,  carries  with  it  an  implied  authority 
to  do  all  acts  customarily  done  in  the  prosecution  of  such  busi- 
ness. The  general  rule  is,  that  besides  his  express  powers,  an 
agent  has  r:ueh  implied  powers  as  are  necessary  to  accomplish 
the  object  to  be  attained  by  the  agency. 

217.  AUTHORITY  OP  AGENT  IMPLIED  FROM  BUSINESS 
USAGE. — Usages  of  business  have  much  to  do  in  determining 
the  powers  of  agents  in  their  dealings  with  third  parties.  Third 
parties  may  act  on  the  presumption  that  an  agent  in  a  particu- 
lar business  has  such  powers  as  agents  in  that  business  usually 
have  and  exercise.  For  example,  payments  of  money  to  one  os- 
tensibly in  charge  of  the  principal's  office  or  counting-room,  and 
sales  by  persons  ostensibly  employed  to  make  sales  in  a  store, 
will  bind  the  principal,  though  in  reality  such  agents  exceed  their 
authority 

218.  AUTHORITY  IMPLIED  FROM  PREVIOUS  ACTS  OR 
CONDUCT. — An  agent's  power  to  enter  into  a  given  contract,  or 
to  do  a  particular  act,  may  be  implied,  or  inferred,  from  his 
having  made  other  like  contracts  or  done  other  like  acts  in  the 
principal's  name  and  with  his  knowledge  and  approval.  When- 
ever a  person  so  acts  as  to  justify  the  belief  in  the  mind  of  a  rea- 
sonable person  that  another  has  authority  to  represent  him  in  a 
given  transaction,  he  will  be  bound  by  whatever  such  other  per- 
son may  do  as  his  agent  in  the  course  of  that  transaction.  In  all 
cases  where  one  deals  with  an  agent  while  acting  under  the  belief 
that  he  has  authority  to  bind  his  principal,  and  such  belief  is 
justified  by  the  previous  conduct  of  the  principal,  the  principal 
is  estopped  from  denying  the  agent's  authority.    Ante,  Sec.  166. 

219.  AUTHORITY— HOW  CONFERRED.— Authority  to  exe- 
cute a  sealed  instrument,  like  a  deed,  must  be  conferred  on  the 
agent  by  a  writing  under  seal ;  but  where  the  instrument  to  be 
executed  need  not  be  under  seal  to  bind  the  principal,  authority 


63 

to  execute  it  may  be  conferred  on  the  agent  orally  or  by  parol. 
Verbal  authority  given  to  an  agent  suffices  for  the  execution  of  all 
contracts  not  under  seal;  and  although  the  contract  to  be  exe- 
cuted, is  required  by  the  statute  of  frauds  to  be  in  writing,  yet 
the  agent's  authority  to  execute  it  need  not  be  in  writing.  A 
deed  may  be  executed  under  parol  authority  if  executed  in  the 
presence  of  the  principal  by  his  direction,  and  if  so  executed  un- 
der such  parol  authority,  is  a  binding  contract  to  convey.  Law- 
son  on  Contracts  (1st  Ed.),  Sec.  169;  Williston  on  Contracts, 
Sec.  275. 

220.  DUTY  OF  AGENT  TO  DISCLOSE  PRINCIPAL.— The 
general  rule  is  that  an  agent  who  does  not  disclose  his  agency, 
and  the  name  of  his  principal,  at  the  time  of  entering  into  a  con- 
tract, becomes  personally  bound.  Hence,  to  avoid  personal  liabil- 
ity upon  a  contract,  an  agent  should  always  disclose  to  the 
opposite  party  his  agency  and  the  name  of  his  principal. 

221.  CONTRACT  IN  WRITING— HOW  EXECUTED.— When 
a  contract  made  by  an  agent  is  in  writing,  the  writing  should 
show  on  its  face  that  it  is  the  contract  of  the  principal ;  for  if  it 
is  so  drawn  that  it  appears  to  be  the  personal  contract  of  the 
agent,  he  may  be  held  personally  bound,  although  he  may  have 
orally  disclosed  his  agency  and  the  name  of  his  principal.  But 
when,  from  the  whole  tenor  of  a  written  contract,  it  sufficiently 
appears  that  one  of  the  parties  thereto  was  in  fact  acting  as 
agent  for  some  one  else  whom  he  intended  to  bind,  that  person 
will  be  bound,  and  not  the  agent,  pro vi  led  the  agent  had  authority 
to  execute  the  agreement. 

222.  RIGHT  TO  HOLD  UNDISCLOSED  PRINCIPAL  WHEN 
DISCOVERED. — The  principal  when  discovered  may  be  sued  on 
a  contract  made  by  an  agent  in  his  own  name,  if  the  agency  was 
not  disclosed  at  the  time  of  making  the  contract.  But  in  that 
event  the  opposite  party  can  not  sue  both  the  principal  and  the 
agent ;  they  are  not  jointly  bound  to  execute  the  agreement ;  when 
the  opposite  party  discovers  who  the  principal  is,  he  must  then 
make  his  election  to  hold  either  the  principal  or  the  agent. 

223.  It  follows  that  if  the  agent  discloses  the  agency  and  the 
name  of  the  principal,  when  a  contract  is  made,  the  opposite  con- 


64 

traeting  party  must  elect  then  and  there  whom  he  will  trust,  the 
agent  or  the  principal.  Thus,  if  A  buys  goods  for  B  and  the  seller 
takes  A's  note  for  the  price,  knowing  that  A  is  really  acting  for 
B,  he  can  not  subsequently  elect  to  hold  B. 

224.  SPECIAL  AND  GENERAL  AGENTS.— Agents  are  of 
two  kinds — special  and  general.  A  special  agent  is  one  authorized 
to  do  a  special  act  or  series  of  acts,  and  has  no  implied  powers, 
further  than  such  as  are  necessary  to  accomplish  what  he  was  di- 
rected or  authorized  to  do.  General  agents,  on  the  other  hand, 
are  those  appointed  by  the  principal  to  conduct  all  of  his  busi- 
ness, or  all  of  his  business  of  a  particular  kind,  or  to  act  for  him 
generally  or  as  they  deem  best  in  a  given  matter.  A  general  agent 
can  not  bind  his  principal  by  acts  done  in  excess  of  his  authority, 
any  more  than  a  special  agent,  but  his  implied  powers  are  much 
greater  than  those  of  a  special  agent. 

225.  REVOCATION  OF  AGENCY.— A  principal  may  ter- 
minate an  agency  at  his  pleasure,  unless  it  be  an  agency  which 
is  coupled  with  an  interest.  For  instance,  if  goods  are  committed 
to  an  agent  to  sell,  and  after  the  sale  the  agent  is  to  pay  out  of 
the  proceeds  a  debt  due  from  the  principal  to  himself,  the  agency 
is  coupled  with  an  interest  and  can  not  be  terminated  by  the 
principal. 

226.  Although  a  principal  is  at  liberty  to  terminate  an  agency 
at  his  pleasure,  yet  when  by  so  terminating  it  he  violates  a  con- 
tract with  his  agent,  as  where  he  has  agreed  that  the  agent  shall 
act  as  his  agent  for  a  definite  period,  and  he  discharges  him  be- 
fore the  expiration  of  that  period,  without  good  cause,  the  prin- 
cipal may  be  held  liable  in  damages  for  so  doing. 

227.  AGENCY  TERMINATED  BY  DEATH.— An  agency  is 
at  once  terminated  by  the  death  of  the  principal,  and  this  rule 
is  so  absolute  that  an  act  done  by  an  agent  after  his  principal's 
death  is  invalid,  although  the  agent  does  not  know  of  the  prin- 
cipal's death.  And  even  an  agency  that  is  coupled  with  an  in- 
terest in  a  court  of  law  is  regarded  as  terminated  by  the  death  of 
the  principal.  Insanity,  like  death,  also  terminates  an  agency, 
but  it  does  not  terminate  an  agency  coupled  with  an  interest.  An 
agency  is  also  terminated  by  the  bankruptcy  of  either  principal 
or  agent;  or  by  the  marriage  of  the  principal,  when  a  woman. 


65 

228.  AUTHORITY  —  HOW  EXERCISED  WHEN  CON- 
FERRED ON  TWO  OR  MORE.— When  authority  to  do  a  given 
act  or  to  execute  a  certain  contract  is  conferred  on  two  or  more 
persons,  it  is  considered  a  joint  agency,  and  both  must  act  to 
bind  the  principal,  unless  the  instrument  containing  the  authority 
expressly  declares  that  they  may  act  severally.  But  when 
authority  is  given  to  a  firm  to  do  a  given  act,  either  member  of 
the  firm  may  exercise  the  authority  if  it  is  exercised  in  the  firm 
name.  When  the  agency  is  joint,  the  death  of  one  of  the  agents 
revokes  the  agency. 

229.  AGENT'S  POWER  TO  DELEGATE  AUTHORITY.— 
When  the  powers  entrusted  to  an  agent  are  such  as  require  the 
exercise  of  personal  discretion,  he  can  not  delegate  them  to  a 
sub-agent.  But  mere  ministerial  powers  not  involving  the  exer- 
cise of  such  discretion,  the  agent  may  delegate.  Thus,  an  agent's 
clerk  may  receive  money  under  ordinary  circumstances  and  give 
receipts  for  the  same,  and  a  clerk  may  sign  an  agent's  name  to 
papers  that  are  usually  signed  that  way. 

230.  FRAUDS  OF  AGENT.— When  an  agent  in  the  particu- 
lar business  that  he  is  authorized  to  transact  commits  a  fraud, 
the  principal  is  liable.  Thus,  if  an  agent,  who  is  authorized  to 
sell  a  horse,  makes  fraudulent  representations  to  induce  a  sale, 
the  principal  is  liable,  although  he  did  not  authorize  them  to  be 
made..  But  for  an  independent  fraud  committed  by  an  agent  not 
within  the  scope  of  his  agency,  the  principal  is  not  liable.  For 
his  torts  and  frauds  committed  while  acting  as  agent,  even  within 
the  scope  of  his  agency,  the  agent  is  always  person?  My  liable. 

231.  AGENT  BOUND  PERSONALLY  WHEN  ACTING 
WITHOUT  AUTHORITY.— It  is  a  general  rule  that  an  agent 
binds  himself  when  he  acts  without  authority,  and  does  not  bind 
his  principal.  But  when  an  agent  makes  a  contract  in  his  prin- 
cipal's name,  supposing  that  he  has  authority  to  do  so,  he  does 
not  bind  himself,  although  he  acts  in  excess  of  his  authority,  if 
the  other  contracting  party  has  the  same  knowledge  of  the  agent's 
powers  which  the  agent  himself  possesses.  On  this  ground  it  has 
on  some  occasions  been  held,  that  public  officers,  whose  powers 
are  defined  by  law,  are  not  personally  liable  for  official  acts  done 
in  excess  of  their  authority,  which  fo:  that  reason  do  not  bind 
the  state. 


66 

In  all  cases,  however,  where  the  agent  and  the  party  with  whom 
he  contracts  have  not  the  same  knowledge  of  the  extent  of  the 
agent's  authority,  a  contract  not  binding  on  the  principal  for 
want  of  authority  in  the  agent,  will  bind  the  agent.  An  agent 
who  acts  without  authority  is  not  liable  unless  the  contract  made 
was  one  which  would  have  bound  the  principal  but  for  the  agent's 
want  of  authority.  Lawson  on  Contracts  (1st  Ed.)  Sec.  195;  52 
N.  Y.,  494;  Williston  on  Contracts,  Sec.  282. 

232.  AGENT,  HOW  PROCEEDED  AGAINST  ON  HIS  UN- 
AUTHORIZED CONTRACT.— It  is  generally  held  in  England 
and  in  the  United  States,  that  if  the  unauthorized  contract  is  in 
form  the  principal's  contract,  the  agent  can  not  be  sued  thereon 
as  a  promisor ;  but  must  be  sued  either  on  his  implied  warranty 
that  he  had  authority  to  do  the  act  in  question,  or  in  tort  for  ex- 
ceeding his  authority,  in  those  cases  where  he  acts  knowing  that 
he  has  no  authority.  Some  courts  hold,  however,  that  he  may  be 
sued  on  the  unauthorized  contract  as  though  it  was  made  in  his 
own  name  and  behalf;  and  all  courts  concede  that  an  agent  may 
be  sued  on  a  contract  if  it  was  really  made  for  the  agent's 
benefit  in  the  name  of  a  fictitious  principal,  or  ostensibly  for  an 
undisclosed  principal.  Lawson  on  Contracts  (1st  Ed.)  Sec.  195; 
Williston  on  Contracts,  Sees.  282  to  285. 

233.  UNAUTHORIZED  CONTRACTS  VOIDABLE— RATI- 
FICATION.— The  unauthorized  contracts  of  an  agent  are  merely 
voidable;  hence  they  may  be  ratified  by  the  principal,  and  any 
act  done  by  the  principal  with  knowledge  that  an  unauthorized 
contract  has  been  made,  which  recognizes  the  contract  as  binding, 
will  amount  to  a  ratification.  Ante,  Sec.  163. 

234.  PRINCIPAL  CAN  NOT  RATIFY  UNAUTHORIZED 
CONTRACT  IN  PART.— When  an  unauthorized  contract  has 
been  made  by  an  agent,  the  principal  can  not  ratify  it  in  part,  and 
refuse  to  ratify  it  in  other  particulars.  He  must  adopt  it  as  an 
entirety  or  disaffirm  it  in  toto ;  thus,  if  an  agent,  employed  to  sell 
a  horse,  without  authority  warrants  its  soundness,  the  principal 
can  not  affirm  the  sale  and  reject  the  warranty. 

235.  SAME  PERSON  CANNOT  ACT  AS  AGENT  FOR  BOTH 
PARTIES  TO  A  CONTRACT.— An  agent  will  not  be  permitted 
to  undertake  the  performance  of  duties  that  are  incompatible; 


67 

hence  a  person  can  not  act  in  making  a  contract  as  agent  for 
both  of  the  contracting  parties.  For  instance,  in  the  sale  of  prop- 
erty the  same  person  can  not  represent  both  the  buyer  and  the 
seller.  A  sale  thus  made  is  voidable.  There  is  one  exception  to 
this  rule,  however ;  an  auctioneer  and  a  broker  may  act  as  agent 
of  the  buyer  and  seller  in  making  a  written  memoranda  of  the  sale 
when  such  written  memoranda  is  required  by  the  Statute  of 
Frauds. 

236.  LIABILITY  OF  AGENT  TO  PRINCIPAL.— An  agent  is 
personally  liable  to  his  principal  for  whatever  damage  the  latter 
sustains  in  consequence  of  a  violation  of  duty,  or  failure  to  obey 
instructions.  But  when  an  agent's  unauthorized  act  has  been 
ratified  by  the  principal,  the  latter  can  not  sue  the  agent  for 
damages  sustained  in  consequence  of  such  unauthorized  act. 


ni 


PARTNERSHIP. 

237.  PARTNERS  OCCUPY  TO  EACH  OTHER  THE  RELA- 
TION OF  AGENTS. — Each  partner  in  a  firm  is  regarded  as  the 
agent  of  all  the  other  members,  and  can  bind  the  firm  to  third 
parties  by  any  contract  within  the  scope  of  the  partnership  busi- 
ness. As  a  result  of  this  rule,  whenever  a  person  contracts  with 
another  as  an  individual,  and  subsequently  discovers  that  the  lat- 
ter is  a  member  of  a  firm  in  whose  behalf  the  contract  was  made, 
he  may  sue  the  firm  thereon.  In  like  manner,  a  silent  or  undis- 
closed partner  may  be  sued  on  the  obligations  of  the  firm. 

238.  DISSOLUTION  OF  FIRM.— A  person  retiring  from  a 
firm  must  give  actual  notice  of  his  retirement  to  all  who  have 
previously  dealt  with  the  firm,  otherwise  he  will  be  liable  for  the 
debts  of  the  firm  subsequently  contracted  in  dealings  with  former 
customers  who  were  not  aware  of  the  dissolution  of  the  firm.  But 
a  general  notice  by  publication  will  suffice  to  release  him  from 
liability  to  those  who  have  not  theretofore  dealt  with  the  firm. 
The  death  of  a  partner  operates  to  dissolve  the  partnership,  and 
notice  of  his  death  need  not  be  given  to  release  the  deceased 
partner's  estate. 

239.  CONTRACTS  BY  PARTNERS— HOW  EXECUTED.— 

In  executing  a  sealed  instrument,  each  partner  should  sign  his 
individual  name  and  affix  a  seal  opposite  thereto.     One  partner 


68 

can  not  execute  an  instrument  under  a  seal  (like  a  deed)  for  the 
firm,  unless  he  has  a  power  of  attorney  under  seal  from  his  co- 
partners authorizing  him  to  do  so.  But  if  a  partner  without  au- 
thority from  his  co-partners  conveys  the  firm's  lands  by  a  deed 
under  seal,  in  all  probability  such  deed  would  be  held  tantamount 
to  an  executory  agreement  to  convey,  which  would  bind  the  firm. 

240.  JOINT  STOCK  COMPANIES.— These  differ  from  part- 
nerships, usually  in  the  fact,  that  one  member  of  the  association 
is  not  an  agent  for  the  other  members,  and  can  not  bind  them 
except  where  an  authority  to  bind  them  is  expressly  conferred, 
or  mtay  be  implied  from  circumstances. 

^VW  FILLING  BLANKS  IN  WRITTEN  INSTRUMENTS. 

241.  INSTRUMENTS  UNDER  SEAL.— If  an  instrument  un- 
der seal,  like  a  deed,  when  delivered,  contains  a  blank  which  must 
be  filled  to  render  the  instrument  operative,  such  blanks  can  only 
be  lawfully  filled  in  pursuance  of  authority  conferred  by  an  in- 
strument under  seal.  But  if  the  grantor  in  a  deed  should  deliver 
it  without  inserting  the  name  of  the  grantee,  and  the  person  to 
whom  the  deed  was  delivered  should  thereafter  insert  his  own 
name  as  grantee,  and  subsequently  convey  the  property  to  an 
innocent  third  party,  the  original  grantor  would  undoubtedly  be 
estopped  from  denying  the  authority  of  the  party  to  whom  he  had 
delivered  it  to  thus  fill  the  blank.  In  this  way,  instruments  exe- 
cuted in  blank  and  delivered  often  becomes  binding  through  the 
operation  of  the  doctrine  of  estoppel. 

242.  UNSEALED  INSTRUMENTS.— Authority  to  fill  blanks 
in  unsealed  instruments  may  be  conferred  orally.  And  where  the 
word  or  words  left  blank,  either  in  a  sealed  or  unsealed  instru- 
ment, are  such  as  the  law  would  supply  by  interpretation,  they 
may  be  filled  by  verbal  authority;  and  although  they  are  filled 
without  authority,  the  interpolation  of  such  words  will  not  invali- 
date the  instrument.  Ante,  Sec.  148.  The  date  of  executing  a 
contract  may  also  be  inserted  in  pursuance  of  oral  authority,  or 
even  without  authority  if  the  true  date  is  inserted. 

243.  NEGOTIABLE  INSTRUMENTS.— When  a  negotiable 
instrument  like  a  promissory  note  is  delivered  by  the  maker  with 
a  blank  left  either  for  the  amount  of  the  note,  or  the  name  of  the 


69 

payee,  such  delivery  carries  with  it  an  implied  authority  to  fill 
such  blanks;  and  although  the  holder  fills  the  blank  for  a  sum 
greater  than  was  intended  by  the  maker,  yet  the  maker  will  be 
bound  to  pay  the  amount  to  one  who  has  purchased  the  same 
without  notice  of  the  fraud. 

ASSIGNMENT  OF  CONTRACTS  AND  CHOSES  IN  ACTION. 

244.  Executory  contracts  can  not  be  asigned  by  either  party, 
so  as  to  require  the  opposite  party  to  accept  performance  from 
some  other  person  than  the  one  whom  he  contracted  with.  For 
example,  where  A  agreed  to  sell  B  a  certain  quantity  of  wheat, 
which  was  deliverable  at  A's  option  during  a  certain  future 
period,  it  was  held  that  A  could  not  sell  or  assign  his  right  to 
deliver  the  article,  to  a  third  party,  without  the  consent  of  B ;  in 
other  words,  that  B  was  not  bound  to  accept  the  wheat  from  any 
other  person  besides  A.  Boykin  vs.  Campbell,  9  Mo.  App.  495; 
Lansden  vs.  McCarthy,  45  Mo.  106 ;  Arkansas  Smelting  Co.  vs. 
Belden  Co.,  127  U.  S.,  379 ;  Mound  Valley  Vitrified  Brick  Co.  vs. 
Mound  Valley  Natural  Gas  &  Oil  Co.,  258  Fed.  Rep.,  936,  943. 
If  A  agrees  to  do  a  certain  thing  for  B,  such,  for  instance,  as  to 
build  a  carriage,  and  it  appears  that  A  was  not  selected  on  ac- 
count of  his  personal  skill,  B  cannot  complain  if  A  employs  C  to 
do  the  job.     5  Queen's  Bench  Division  (Eng.  Reps.)  149. 

But  when  one  party  to  a  contract  has  done  the  act  contracted 
to  be  done  by  him,  and  has  a  claim  against  the  other  for  the 
price  agreed  to  be  paid,  this  latter  claim  is  termed  a  chose  in 
action  and  the  same  may  be  assigned. 

245.  CHOSES  IN  ACTION.— It  is  a  rule  of  the  common  law 
that  a  chose  in  action  can  not  be  assigned  by  the  creditor  so  as 
to  authorize  the  assignee  of  the  chose  or  debt  to  sue  thereon  in 
his  own  name.  But  while  the  common  law  denied  the  assignee's 
right  to  sue  in  his  own  name,  it  conceded  his  right  to  sue  in  the 
assignor's  name,  and  would  not  permit  the  assignor  to  dismiss 
or  compromise  the  suit.  In  equity  the  rule  was  different :  in  that 
forum  the  assignee  was  permitted  to  sue  in  his  own  name. 

246.  MODERN  RULE.— At  the  present  time  statutes  in 
nearly  all  of  the  states  permit  the  assignee  of  a  chose  in  action 
to  sue  in  his  own  name.    The  right  to  assign  choses  in  action  has 


70 

been  so  enlarged  by  statute  in  many  states,  as  to  permit  an  assign- 
ment of  any  claim,  whether  it  grows  out  of  a  contract  or  a  tort, 
provided  the  claim  survives  to  the  administrator  or  executor  of 
the  assignor.  Thus,  in  Missouri  a  claim  growing  out  of  an  injury 
done  to  personal  property  may  be  assigned,  and  the  assignee  may 
sue  thereon  in  his  own  name.  Snyder  vs.  The  Wabash,  St.  L.  & 
P.  Ey.  Co.,  86  Mo.  613. 

247.  NOTICE  OF  ASSIGNMENT  NECESSARY.— But  to 
make  the  assignment  of  a  debt  or  claim  effectual,  the  assignee 
should  notify  the  debtor  of  the  assignment,  otherwise  payment 
to  the  assignor  will  discharge  the  debt  or  claim,  if  made  without 
notice  of  the  assignment. 

248.  POWER  OF  GOVERNMENT  TO  ASSIGN  CHOSES  IN 
ACTION. — The  government  could  always  sue  in  its  own  name 
as  assignee  of  a  chose  in  action,  and  its  assignee  could  also  sue 
in  his  own  name. 

249.  BILLS  OF  EXCHANGE  ASSIGNABLE.— Foreign  bills 
of  exchange  and  negotiable  notes  could  also  be  sued  upon  by  an 
assignee  or  holder  thereof  in  his  own  name.  An  assignment  by 
operation  of  law  also  authorizes  a  suit  in  the  name  of  the  assignee. 
Thus,  assignees  in  bankruptcy,  executors  and  administrators 
could  alwavs.  sue  in  their  own  names. 


TIME— HOW  COMPUTED. 

250.  GENERAL  RULE. — In  computing  the  time  within  which 
an  act  is  to  be  done  or  notice  given,  the  rule  is  to  exclude  the 
first  day  and  include  the  last,  unless  the  last  day  is  Sunday,  which 
is  also  generally  excluded.  Thus,  a  promise  made  on  Monday  to 
pay  a  sum  of  money  in  seven  days  would  make  it  payable  the 
following  Monday. 

251.  The  word  "until"  is  generally  construed  as  exclusive, 
so  that  one  who  has  until  October  10th  to  do  a  given  act,  can  not 
usually  do  the  act  on  that  day.  But  this  rule  is  not  invariable ;  it 
may  be  that  other  parts  of  the  agreement  will  show  that  such  was 
not  the  actual  intent  of  the  parties,  and  the  intent  will  always 
govern. 

252.  TIME  NOT  THE  ESSENCE  OF  A  CONTRACT.— Time 

is   not    generally    regarded    as    being   to    such    extent    '*of    the 


71 

essence  of  a  contract,"  either  in  courts  of  law  or  equity,  that  a 
person  can  not  recover  upon  a  contract  because  the  work  under- 
taken by  him  was  not  completed  on  the  day  agreed  upon.  It  is 
believed  to  be  universally  true  that  a  person  cannot  avoid  paying 
for  services  rendered  to  him  that  were  of  some  value,  merely  be- 
cause they  were  not  performd  within  the  time  specified  in  a  con- 
tract existing  between  the  parties.  But  a  contract  may  be  so 
worded  that  time  becomes  of  the  very  essence  of  the  agreement, 
as  where  A  agrees  to  do  a  given  act  provided  B  does  some  other 
act  by  a  given  day ;  here,  if  the  act  to  be  done  by  B  is  not  done 
by  the  appointed  day,  A  will  be  released  from  his  promise.  The 
parties  to  a  contract  may  expressly  agree  that  time  shall  be  re- 
garded as  of  the  essence  of  the  contract,  and  such  agreements  will 
be  enforced. 

253.  MONTH  AND  YEAR— LEAP  YEAR.— At  common  law 
the  term  "month"  when  used  in  a  contract,  meant  a  lunar  month 
of  twenty-eight  days ;  but  by  statutes  enacted  in  most,  if  not  all 
the  states,  the  words  "year"  and  "month"  now  mean  a  calendar 
year  or  month.  For  example,  if  A,  on  the  16th  day  of  January, 
promises  to  pay  to  B  a  certain  sum  of  money  one  month  after 
date,  the  payment  will  be  due  on  the  16th  day  of  February,  pro- 
vided days  of  grace  are  not  allowed.  So  a  promise  on  the  16th 
of  January  to  pay  a  sum  of  money  one  year  after  date,  will  mature 
on  January  16th  of  the  following  year.  In  leap  years  February 
28th  and  29th  are  counted  as  one  day. 

LEX  LOCI  AND  LEX  FORI 

254.  The  obligation  imposed  by  the  terms  of  a  contract  is  de- 
termined by  the  law  of  the  place  where  the  contract  was  made  or 
was  intended  to  be  executed,  which  is  termed  the  Lex  Loci,  but 
the  remedy  for  enforcing  a  contract  is  that  which  is  provided  by 
the  law  of  the  place  where  the  suit  is  brought  to  enforce  the  con- 
tract, termed  the  Lex  Fori.  If  a  contract  which  was  made  in  one 
state  to  be  there  executed,  is  sued  upon  in  another  state,  it  will 
be  given  such  effect  in  the  latter  state  as  it  would  have  had  if  it 
had  been  sued  upon  in  the  former  state;  but  the  courts  of  the 
state  where  the  suit  is  brought  will  apply  their  own  remedies  for 
its  enforcement ;  for  example :  they  will  not  imprison  a  party  for 
the  debt  created  by  the  contract  if  the  remedy  of  imprisonment 


72 

for  debt  has  been  abolished  in  that  state,  although  such  remedy 
would  have  been  available  in  the  state  where  the  contract  was 
made  and  was  intended  to  be  executed. 

255.  COMITY. — Through  comity,  the  courts  of  one  country 
will  ordinarily  enforce  a  contract  made  in  another  country,  if  the 
same  is  valid  under  the  laws  of  the  country  where  it  was  made. 
The  general  rule  is  that  a  contract  valid  where  made  is  valid 
everywhere ;  but  if  it  is  not  valid  where  made  it  is  not  valid  any- 
where. As  a  result  of  this  rule,  if  a  contract  valid  where  made 
is  sued  upon  in  another  state,  it  will  generally  be  enforced,  al- 
though the  contract  would  have  been  invalid  if  made  in  the  state 
where  the  suit  is  brought. 

256.  EXCEPTIONS  TO  RULE.— The  rule  last  stated  is  sub- 
ject to  some  limitations.  Thus,  if  a  contract  which  the  parties 
intend  to  perform  in  a  state  where  such  contracts  are  invalid,  is 
made  in  another  state  where  such  contracts  are  permitted,  merely 
to  evade  the  laws  of  the  former  state,  its  courts  will  not  enforce 
it.  Miller  vs.  Tiffany,  1  Wall.  298,  310;  Lewis  vs.  Headley,  36 
Ills.  433.  Furthermore,  the  courts  of  a  country  or  state  are  not 
bound  by  comity  to  enforce  contracts  made  abroad  and  there  held 
to  be  valid,  if  they  are  against  good  morals,  or  are  opposed  to 
the  general  policy  or  institutions  of  the  state  whose  courts  are 
asked  to  enforce  them.    Bliss  vs.  Brainard,  41  N.  H.  256. 

257.  INTEREST. — Parties  may  bargain  in  one  state  for  a 
higher  rate  of  interest  than  its  laws  permit,  if  the  money  is  made 
payable  in  a  state  where  the  rate  of  interest  bargained  for  is 
lawful,  provided  the  contract  is  made  in  good  faith  and  not  for 
the  purpose  of  evading  the  laws  of  the  former  state.  Miller  vs. 
Tiffany  (supra)  ;  Andrews  vs.  Pond,  13  Peters,  65,  78 ;  Curtis  vs. 
Leavitt,  15  N.  Y.  92. 

258.  CONVEYANCES  OF  LAND  AND  PERSONAL  PROP- 
ERTY.— It  is  a  rule  of  universal  application  that  a  conveyance  of 
land  must  be  made  in  conformity  with  the  laws  of  the  place  where 
the  land  is  located.  For  example,  the  law  of  the  state  where  the 
land  is  situated  determines  whether  the  grantor  in  a  deed  is  of 
the  requisite  age  to  make  a  deed,  and  not  the  law  of  the  state 
v/here  the  deed  is  made.  Barnum  vs.  Barnum,  42  Md.  251.  But 
as  personal  property  has  no  fixed  situs,  a  conveyance  of  the  same, 


^3. 


73 

good  by  the  laws  of  the  place  where  the  conveyance  is  made, 
is  effectual  to  pass  the  title,  although  the  property  is  located  in 
another  state. 

259.  PLACE  OF  CONTRACT— HOW  DETERMINED.— The 
obligation  created  by  a  contract  is  to  be  determined  by  the  law  of 
the  place  where  the  parties  intend  that  it  shall  be  performed; 
and  the  place  where  a  contract  purports  to  have  been  executed, 
in  the  absence  of  proof,  is  presumed  to  be  the  place  where  it  is  to 
be  performed.  If  a  contract  contains  nothing  that  fixes  the 
place  of  performance,  no  reason  is  perceived  why  the  intent  of  the 
parties  in  this  respect  may  not  be  shown  by  oral  testimony.  But 
when  a  promise  is  made  to  pay  money,  the  place  where  payment 
is  to  be  made  is  the  place  of  performance.  For  that  reason  a 
draft  drawn  in  one  state,  but  made  payable  in  another,  is  con- 
strued according  to  the  laws  of  the  latter  state.  Stix  vs.  Mat- 
thews, 63  Mo.  371. 

260.  LEX  FORI  —  STATUTE  OF  LIMITATIONS  —  IN- 
TEREST.— The  Statute  of  Limitations  applicable  to  a  suit  on  a 
contract,  is  that  of  the  state  where  the  suit  is  brought  to  enforce 
it,  although  the  contract  was  made  and  was  to  be  performed 
elsewhere.  So  when  interest  is  allowed  in  a  suit  on  a  contract, 
not  because  the  contract  calls  for  interest,  but  merely  as  damages, 
the  lex  fori  governs  as  to  the  rate  of  interest.  Goddard  vs. 
Foster,  17  Wall.  123;  143.  In  those  cases,  however,  where  a 
statute  creates  a  right  of  action  not  known  to  the  common  law, 
and  fixes  a  period  of  limitation,  such  period  of  limitation  is  ap- 
plicable to  the  cause  of  action  when  sued  upon  even  in  a  foreign 
state,  rather  than  the  local  statute.  Theroux  vs.  Northern  Pac. 
R.  R.  Co.,  54  Fed.  Rep.  84. 

BREACH  OF  CONTRACT— RIGHTS  AND  LIABILITIES 
OF  PARTIES. 

261.  For  a  breach  of  contract,  courts  of  common  law  can  only 
render  a  judgment  for  the  amount  of  damages  sustained;  hence 
it  may  be  said  that  at  common  law  a  party  to  a  contract  has  the 
right  to  break  or  repudiate  it,  on  condition  that  he  pays  the  dam- 
ages sustained  by  the  opposite  party.  Courts  of  equity,  however, 
will  not  always  permit  a  party  to  break  his  contract  on  the  con- 
dition last  stated;   in  some  cases  they  will   compel  parties   to 


74 

execute  their  agreements.  For  example,  they  will  compel  the 
specific  performance  of  a  promise  to  sell  and  convey  lands,  if  the 
agreement  is  fair  and  honest  and  the  consideration  adequate. 
Ante,  Sec.  29.  And  in  some  special  cases  they  will  doubtless  com- 
pel the  specific  performance  of  contracts  relating  to  personal 
property. 

262.  CONTRACT  BROKEN  BY  NOTICE  THAT  IT  WILL 
NOT  BE  PERFORMED.— If  either  party  to  an  executory  con- 
tract notifies  the  other  that  he  will  not  execute  it,  either  before 
or  after  the  time  to  perform  has  arrived,  the  latter  may  imme- 
diately treat  the  contract  as  broken  and  sue  for  damages.  Frost 
vs.  Knight,  L.  R.  7,  Ex.  Ill,  114 ;  Rochester  vs.  De  la  Tour  2  E. 
&  B.  678 ;  Howard  vs.  Daly,  61  N.  Y.  362 ;  Zuck  vs.  MeClure,  98 
Pa.  St.  541.  This  rule,  however,  does  not  apply  to  unilateral  con- 
tracts, such  as  promissory  notes.  If  the  maker  of  a  note  says  he 
will  not  pay,  he  cannot  be  sued  until  the  note  matures. 

263.  CONTRACT  BROKEN  BY  DISABILITY  TO  PERFORM. 

— A  contract  is  broken  and  a  suit  may  be  maintained  for  dam- 
ages, if  when  it  is  made  a  party  thereto  lacks  the  power  to  execute 
it,  as  where  a  man  already  married  enters  into  a  marriage  engage- 
ment with  a  woman,  she  not  being  aware  of  the  fact  that  he  is 
married ;  a  contract  is  also  broken,  if  after  it  is  made  either  party 
voluntarily  puts  it  out  of  his  power  to  perform,  as  where  a  person 
after  contracting  to  execute  a  lease  at  a  future  day,  before  that 
day  leased  the  premises  to  a  third  party.  Ford  vs.  Tiley,  6  B.  & 
Co.  325;  Short  vs.  Stone,  8  Q.  B.  358;  Sheehan  vs.  Barry,  27 
Mich.  218. 

264.  When  one  party  to  an  executory  contract  notifies  the 
other  before  the  time  of  performance  arrives,  that  it  will  not  be 
executed,  the  latter  party  has  an  election  to  treat  the  contract  as 
broken  or  still  in  force.  If  he  elects  to  treat  it  as  still  in  force, 
such  election  keeps  the  contract  alive  for  the  benefit  of  the  oppo- 
site party,  because  if  before  the  time  to  perform  arrives  an  event 
occurs  which  is  a  lawful  excuse  for  non-performance,  the  latter 
may  avail  himself  of  such  event,  as  an  excuse  for  non-perform- 
ance, notwithstanding  his  original  refusal  to  perform.  Avery  vs. 
Bowden,  5  E.  &  B.  714.  It  has  been  held,  however,  that  a  person 
can  not  recover  for  work  done  on  the  personal  or  real  property 
of  another,  although  such  work  was  done  in  pursuance  of  a  con- 


75 

tract,  if  before  the  work  was  done  he  was  directed  by  the  opposite 
party  not  to  do  it.  Clark  vs.  Marsiglia,  1st  Denio,  317.  When 
a  party  to  a  contract  receives  notice  from  the  opposite  party  that 
he  will  not  execute  it,  it  is  usually  advisable,  for  the  reasons  above 
indicated,  to  treat  the  contract  as  broken  and  no  longer  in  force. 

265.  CONTRACT  BROKEN  WHEN  WORK  IS  NOT  DONE 
WITH  ORDINARY  SKILL.— W^hen  work  of  any  sort  is  under- 
taken, there  is  an  implied  obligation  that  it  will  be  done  with 
ordinary  skill  and  in  a  workmanlike  manner.  Hence,  if  it  is  not 
done  with  ordinary  skill  or  in  a  workmanlike  manner,  the  eon- 
tract  is  broken  and  an  action  for  damages  will  lie. 

266.  OBSTRUCTING  PERFORMANCE.— If  a  party  to  a  con- 
tract intentionally  obstructs  or  hinders  the  opposite  party  in  the 
performance  of  what  he  has  undertaken  to  do,  the  former  is 
guilty  of  a  breach  of  contract.  The  party  thus  obstructed  has 
an  election  to  treat  the  contract  as  broken  in  consequence  of  the 
wrongful  act  of  the  opposite  party,  and  sue  thereon  for  the  dam- 
age sustained,  or  he  may  ignore  the  contract  and  sue  upon  a 
quantum  meruit  for  services  rendered;  or  he  may  fully  execute 
the  contract  on  his  part  and  sue  for  the  damage  occasioned  by 
the  obstacles  interposed  by  the  opposite  party.  In  all  cases  where 
one  party  to  an  agreement  intentionally  hinders  or  delays  the 
other  in  the  performance  of  his  duty,  the  latter  may  always  plead 
such  fact  as  an  excuse  for  an  alleged  non-performance  or  mis- 
performance  on  his  part.  For  example,  if  a  contractor  agrees  to 
build  a  house  within  six  months  and  to  pay  a  penalty  for  each 
day's  delay  beyond  that  period,  in  a  suit  brought  against  him  for 
the  penalties  so  incurred  he  may  plead  as  a  defence,  if  such  be  the 
fact,  that  the  delay  in  completing  the  house  was  due  to  impedi- 
ments placed  in  his  way  by  the  opposite  party. 

267.  CONCURRENT  ACTS— CONTRACTS,  WHEN  BRO- 
KEN.— When  a  contract  contemplates  the  doing  of  concurrent 
acts,  as  where  one  party  promises  to  sell  and  convey  property 
on  the  payment  of  a  certain  price,  the  contract  is  not  broken  and 
neither  party  thereto  can  sue  as  for  a  breach  thereof,  until  one 
party  has  performed  his  part  of  the  agreement,  or  has  tendered 
performance,  and  the  opposite  party  has  refused  to  perform.  But 
even  in  such  cases  the  contract  of  sale  is  broken  without  tender 
of  performance  by  the  purchaser,  if  the  vendor  voluntarily  puts 


76 

it  out  of  his  power  to  convey,  as  by  a  sale  of  the  property  to  a 
third  party.    Ante,  Sec.  263. 

268.  SUCCESSIVE  ACTS— CONTRACT,  WHEN  BROKEN.— 
It  frequently  happens  that  a  contract  requires  the  parties  thereto 
to  do  certain  acts  in  succession  or  alternately.  In  all  such  cases 
the  contract  is  broken  whenever  one  party  fails  to  do  anything 
required  of  him,  provided  the  other  party  is  not  at  the  time  in 
default. 

A  breach  of  this  character,  if  the  thing  not  done  is  important, 
operates  to  discharge  the  party  not  in  default  from  his  liability 
to  further  perform  the  contract,  and  he  may  maintain  an  action 
against  the  opposite  party  for  damages ;  or,  if  prior  to  the  breach, 
the  party  not  in  default  has  already  partially  performed  the 
agreement,  he  may  usually  elect  to  abandon  the  contract  and  sue 
the  opposite  party  for  the  reasonable  value  of  the  services 
rendered  or  materials  furnished  prior  to  the  breach.  Erlich  vs. 
Aetna  Life  Ins.  Co.,  88  Mo.  249,  257 ;  Mitchell  vs.  Scott,  41  Mich. 
108 ;  Fitzgerald  vs.  Allen,  128  Mass.  234. 

269.  MANNER  IN  WHICH  CONTRACT  MAY  BE  BROKEN. 

From  what  has  been  said  it  follows  that  a  contract  may  be 

broken  in  four  ways:  1st,  by  notice  that  it  will  not  be  performed; 
2d,  by  rendering  performance  impossible ;  3d,  by  wrongfully  ob- 
structing performance  by  the  opposite  party ;  and  4th,  by  wholly 
or  partially  failing  to  do  what  one  has  agreed  to  do  when  the 
time  to  act  arrives. 

270.  WHEN  BREACH  DISCHARGES  CONTRACT.— For  a 
breach  of  contract  committed  by  one  party,  the  opposite  party 
may  always  maintain  an  action  for  damages ;  but  it  is  not  always 
the  case  that  the  opposite  party  is  released  from  his  obligation 
to  further  perform,  in  consequence  of  the  breach.  Such  may  or 
may  not  be  the  result,  depending  upon  the  nature  of  the  agree- 
ment and  the  character  of  the  breach.  German  Savings  Inst.  vs. 
De  La  Vergne  Ref.  Mach.  Co.,  70  Fed.  Rep.  146. 

271.  INDEPENDENT  PROMISES.— If  the  promises  made  by 
the  parties  to  a  contract  are  wholly  independent  of  each  other 
(as  may  happen),  then  neither  party  is  released  from  his  promise 
by  the  failure  of  the  other  to  perform. 

Thus,  in  a  very  old  case  where  W  agreed  to  raise  five  hundred 


77 


soldiers  and  bring  them  to  a  certain  port,  and  C  agreed  to  find 
ships  and  victuals  to  carry  them  to  a  certain  place,  it  was  held 
that  W  could  maintain  a  suit  for  failure  to  provide  the  ships,  al- 
though C  pleaded  that  at  the  time  the  suit  was  brought  W  had 
not  raised  the  soldiers.  Ware  vs.  Chappel,  Style's  Rep.  186. 
Here  it  will  be  seen  that  as  the  promises  were  construed  to  be 
wholly  independent  or  absolute,  C  was  not  released  from  his 
promise  by  the  failure  of  W  to  fulfill  his.  In  these  days  it  rarely 
happens  that  promises  are  construed  to  be  wholly  independent  of 
each  other.  Mecum  vs.  R.  R.  Co.,  21  Ills.  533;  Peques  vs.  Mosby, 
7  Sm.  &  M.  340. 

272.  DEPENDENT  PROMISES.— Promises  are  said  to  be 
dependent  when  an  act  stipulated  to  be  done  by  one  party  to  a 
contract  is  only  to  be  done  after  the  doing  of  some  act  by  the 
opposite  party.  When  the  promises  are  dependent,  a  total  failure 
to  perform  by  him  who  is  first  to  act  will  discharge  the  opposite 
party  from  his  obligation  to  perform. 

273.  FAILURE  TO  PERFORM  BEING  IN  SOME  MINOR 
MATTER.— But  when  the  failure  to  perform  is  in  some  non- 
essential or  minor  particular,  the  opposite  party  will  not  be  dis- 
charged unless  the  parties  have  expressly  agreed  that  it  shall  be 
deemed  vital.  Thus,  where  an  opera  singer  engaged  to  sing  for  a 
season,  contracted  to  be  in  London  six  days  before  the  commence- 
ment of  the  season  so  as  to  attend  rehearsals,  and  failed  to  arrive 
until  two  days  before  the  season  opened,  it  was  held  that  the 
opposite  party  could  not  treat  the  contract  as  dicharged  by  such 
default,  but  could  only  maintain  an  action  for  the  damages  sus- 
ained.  Bettini  vs.  Gye,  L.  R.,  1  Q.  B.  183.  See  also  McAndrew  vs. 
Chappel,  L.  R.,  1  C.  P.  643. 

274.  SAME  SUBJECT  CONTINUED.— In  many  cases  it  is 
hard  to  determine  when  a  failure  by  one  party  to  do  some  ante- 
cedent act,  in  the  precise  manner  and  form  agreed  upon,  is  so 
far  vital  that  it  will  discharge  the  opposite  party  from  his  obli- 
gation to  perform.  It  was  held  in  one  case  that  the  failure  of 
the  principal  singer  in  an  opera  to  take  part  in  the  opening  and 
early  performances  of  an  operatic  season,  as  agreed,  discharged 
the  opposite  party  from  his  contract  to  employ  her.  Poussard 
vs.  Spiers,  L.  R.,  1  Q.  B.  410.  In  another  case  where  a  party  sold 
certain  pig  iron  to  be  "shipped  from  Glasgow  as  soon  as  pos- 


78 

sible,"  and  it  was  shipped  from  Leith  instead  of  Glasgow,  it  was 
held  that  the  buyer  was  discharged  and  was  not  bound  to  accept 
and  pay  for  the  iron.  Pope  vs.  Filley,  115  U.  S.  213.  See  also 
Lowber  vs.  Bangs,  2  Wall.  728.  The  opposite  party  will  always  be 
discharged  by  a  failure  to  perform  in  some  respect  that  may  seem 
unimportant,  if  such  failure  in  fact  frustrates  the  object  of  the 
contract,  or  if  it  appears  that  the  parties  regarded  the  particular 
thing  left  undone  as  important.  Davison  vs.  Von  Lingen,  113 
U.  S.  40. 

275.  PROMISE  CONDITIONAL  ON  ENTIEE  PERFORM- 
ANCE.— If  one  party  promises  to  do  a  given  act  only  after  the 
opposite  party  has  fully  performed  the  entire  contract  on  his 
part,  and  the  latter  fails  to  fully  perform,  the  former  is  released 
from  his  promise.  But  in  such  cases  if  the  party  not  in  default 
has  derived  a  substantial  benefit  from  part  performance,  and 
has  accepted  the  same,  he  would  at  this  day  be  held  liable  as 
upon  an  implied  promise  to  pay  the  reasonable  value  of  the  ser- 
vices rendered.    Ante,  Sec.  108;  Britton  vs.  Turner,  6  N.  H.  481. 

276.  RIGHT  TO  TREAT  CONTRACT  AS  DISCHARGED 
LOST  BY  RECEIPT  OF  SUBSTAI^TIAL  PART  OF  CONSID- 
ERATION.— When  a  party  has  received  a  substantial  part  of 
what  was  the  consideration  for  his  promise,  he  can  not  treat  the 
contract  as  discharged,  although  the  opposite  party  has  failed  to 
keep  his  promise  in  some  respect  that  would  have  entitled  the 
former  to  treat  the  contract  as  abrogated,  as  long  as  it  was  wholly 
executory.  In  such  cases  the  party  who  has  received  a  substan- 
tial part  of  the  consideration  bargained  for,  should  perform  his 
own  promise  and  sue  the  opposite  party  for  damages.  Thus, 
where  B  had  conveyed  a  plantation  and  slaves  to  E  and  warranted 
the  title  to  the  slaves,  and  E  promised  to  pay  B  therefor  a  certain 
annuity,  it  was  held  that  E  having  received  the  plantation  could 
not  treat  his  promise  to  pay  the  annuity  as  discharged,  because 
the  title  to  certain  slaves  failed.  Boone  vs.  Eyre,  1  H.  Blk.  273 ; 
Ellen  vs.  Topp,  6  Ex.  424;  and  German  Sav.  Inst.  vs.  De  La 
Vergne  Refrg.  Mach.  Co.,  70  Fed.  Rep.  146. 

277.  CONTRACT  BROKEN— PROMISE  CREATED  BY  LAW. 
— In  this  connection  it  should  be  stated  that  when  a  party  has 
failed  to  fully  comply  with  his  contract,  but  has  nevertheless  by 
a  partial  or  imperfect  performance  conferred  a  benefit  upon  the 


79 

opposite  party,  which  the  latter  has  accepted,  he  may  maintain 
an  action  against  the  benefited  party  for  the  reasonable  value  of 
what  has  been  done  and  accepted,  although  he  cannot  recover  in 
an  action  upon  the  contract.  But  in  such  cases  the  benefited 
party  is  at  liberty  to  offset  against  a  recovery  the  amount  of  the 
damages  which  he  has  sustained  in  consequence  of  an  imperfect 
or  partial  performance  of  the  contract  by  the  opposite  party. 
Eyerman  vs.  Mt.  Sinai  Cemetery  Association,  61  Mo.  489 ;  Yeats 
vs.  Ballentine,  56  Mo.  530,  536. 

278.  FAILURE  TO  PERFORM  INTENTIONAL.— Some  au- 
thorities maintain,  however,  that  a  party  can  not  recover  in  any 
form  of  action  for  a  benefit  conferred  upon  the  opposite  party  by 
a  partial  or  imperfect  performance,  if  the  party  in  default  wil- 
fully abandoned  the  work  undertaken,  or  intentionally  did  the 
work  in  an  improper  manner.  Dermott  vs.  Jones,  2  Wall.  1,  9; 
Haslack  vs.  Mayers,  2  Butcher,  284;  Plummer  vs.  Bucknam,  55 
Maine,  105. 

279.  SEVERABLE  CONTRACT,  WHEN  DISCHARGED  BY 
BREACH. — When  a  contract  is  severable  (for  example,  when  it 
requires  one  party  to  deliver  a  certain  quantity  of  goods  in  in- 
stallments at  different  times,  each  installment  to  be  paid  for  as 
delivered),  the  Supreme  Court  of  the  United  States  holds,  that  the 
buyer  is  discharged  from  his  promise,  if  he  so  elects,  as  to  all  sub- 
sequent deliveries,  if  the  opposite  party  fails  on  any  occasion  to 
deliver  the  stipulated  quantity.  Norring-ton  vs.  Wright,  115  U.  S. 
188.  Contrary  decisions  have  been  made  in  England.  Simpson  vs. 
Crippen,  L.  R.  8  Q.  B.  14 ;  Freeth  vs.  Burr,  L.  R.  9  C.  P.  208 ;  Law- 
son  on  Contracts  (1st  Ed.)  Sec.  448;  Williston  on  Contracts,  Sees. 
685  to  687. 

280.  CONTRACT  DISCHARGED  OTHERWISE  THAN  BY 
BREACH.— It  has  already  been  stated  that  a  party  to  a  contract 
may  be  released  from  the  same  otherwise  than  by  a  breach 
thereof  by  the  opposite  party.  Thus,  a  party  may  be  released 
from  his  obligation  to  perform  a  contract,  by  consent  of  the  op- 
posite party,  or  because  it  has  become  impossible  or  unlawful 
to  execute  it,  ante,  Sees.  109,  112 ;  or  because  of  a  material  alter- 
ation by  the  opposite  party,  ante,  Sec.  147;  or  by  the  happening 
of  some  event  which  the  parties  have  expressly  agreed  shall 
operate  to  discharge  it. 


80 


INDEX: 

(References  are  to  sections.) 

Sections. 

/  #2Abrogation  of  Contracts — Release 169-178y^^«-'^'^ 

/  7Agents— Contracts  by 213-236  ^  ^/'^'f. 

/^Alteration  of  Contracts 147-158^  f%-if€ 

^  ^Assignment  of  Contracts  and  choses  in  action 244-249(M^4y*'  lO 

j?3Breach  of  Contract — Rights  and  Liabilitis  of  parties 2  6 1-2  80^*^  7? ~7 7 

7  Consideration 16-   44  ^  S^'  '5 

/    Contracts — Definitions,  classification,  essentials  of 1-  15  "*r* 

^Created  by  Law — Quasi  Contracts 57-   70  Qfj^Jo'"*- 

/f  Oral  contracts    51-   56  ^1^^  f^~f^ 

3  Contracts  under  seal 45-   50  fy- ^^'-^J^fi 

g  Contracts  entered  into  by  mistake 136-138^5****  ■^ 

(c  How   executed    71-   84^^^"'^*^ 

)  (a  Corporations — Contracts  of 206-212^^t5^7"' «/ 

(jl  Duress — Its  effect  on  contracts 139-146^^'^"^ 

/  /  Election   and    Waiver 159-168  /*p.¥5-^o 

I  3  Infants — Incapacity  to  make  contracts 17  9-196ay^'^<^~^^ 

/5~Insane   Persons— same 199-205  /LfK^I'^l 

n  Interpretation  of  Contracts 85-135^  2 5";^ 7. 

^:(,Lex  Loci  and  Lex  Fori 254-260%''^'^ 

/'fMarried  Women — Contracts  of 197-198^4- ^^"^7 

/^Partnership    237-240^^^^7'^  » 

2.  /  Time— how  computed 250-253(itf<7^''7/ 


RULES  OF  CONSTRUCTION  OF  CONTRACTS. 

1.  'Vhere  there  is  a  conflict  between  printed  and 

written  words,  the  written  words  will  control 

2.  A  contract  will  be  construed  most  strongly  against 

the  maker. 

3.  A  contract  susceptible  of  two  meanings  will  be 

given  the  meaning  which  will  render  it  valid; 

wherever  possible  it  will  be  construed  to  render 
it  reasonable  rather  than  unreasonable; 

the  meaning  v/hich  best  gives  effect  to  the  inten- 
tion of  the  parties  will  be  given; 

the  intention  of  the  parties  will  be  collected 
from  the  whole  document. 

REL'IEDIES  FOR  BREACH  OF  CONTRACT. 

The  measure  of  damage  is,  so  far  as  money  can  do  so, 
to  put  him  in  the  same  condition  he  would  be  in 
if  the  other  party  had  completed  the  contract. 

Damages  are  furnished  by  way  of  compensation  and  not 
for  punishment. 

Frequently  parties  make  a  provision  for  the  amount  tc 
be  paid  as  liquidating  damages  in  the  event  thei 
is  a  breach  of  contract. 

In  certain  cases  injured  party  can  go  to  court  of 

equity  and  have  the  court  decree  spe-cific  per- 
formance of  the  contract;  as  to  make  a  deed  to 
property,  etc. 

■>>•  -<C-  "/^  '/•    ■<'-  •;?•  i''    "Jr  •?(-  ^  "/?•  4^  ■}»•  ^  "J^  -Jf 

DISCHARGE  OF  CONTRACT. 

1.  By  agreement  of  the  parties. 

2.  By  full  and  complete  performance  and  termination 

by  its  own  terms. 

3.  By  breach,  'jrhere  one  party  breeiks  the  obligation 

which  has  been  imposed  upon  him. 

4.  *7here  by  act  of  God  or  otherwise  the  performance 

is  impossible  as  the  death  of  a  person  who  has 
contracted  to  render  his  personal  service. 

5.  By  operation  of  law,  this  where  a  party  becomes 

bankrupt,  or  a  document  is  discovered  altered  bji 
•raaure  or  addition.  Thi»  applies  to  verbal  con- 
tracts as  well  as  written  contracts. 


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